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IN THE UNITED STATES BANKRUPTCY COURT FOR THEEASTERN DISTRICT OF TENNESSEE
In re
JAMES SCOTT LAWSON Case No. 09-36177KERRI McCON LAWSONa/k/a KERRI ANN McCON
Debtors
KENNETH JAMES HART Case No. 09-36514CARLA DEE HART
Debtors
EVA LOUISE NEWMAN Case No. 09-36772
Debtor
MAURICE ROYSTON SOLES Case No. 09-36796LILLIE LOUISE SOLES
Debtors
CLEOFUS ANTHONY SANCHEZ, JR. Case No. 09-36802BRANDY LEE SANCHEZ
Debtors
WILLIAM BRADLEY DICKERSON Case No. 09-36875CYNTHIA TAYLOR DICKERSON
Debtors
MARY LOUISE ZICK Case No. 09-36938
Debtor
JOHN DOUGLAS COX Case No. 10-30169
Debtor
CHARLES ALLEN HOFFMAN Case No. 10-30181
Debtor
CARL DEAN LUTTRELL, JR. Case No. 10-30275SHERRY RENEE LUTTRELL
Debtors
CYNTHIA LEA VITTETOE Case No. 10-30326a/k/a CYNTHIA LEA JETT
Debtor
JOSEPH CHARLES McGEE Case No. 10-30353APRIL DAWN McGEE
Debtors
NATASHA OLIVIA WOMBLE Case No. 10-30382
Debtor
GARY STEVEN AARON, II Case No. 10-30442
Debtor
KALENDA FAYE KNIGHT Case No. 10-30444
Debtor
MEMORANDUM ON DEBTOR ATTORNEY FEES AND DISCLOSURE MOTIONS
APPEARANCES: RICHARD F. CLIPPARD, ESQ.UNITED STATES TRUSTEE William R. Sonnenburg, Esq. 31 East 11th Street 4th Floor Chattanooga, Tennessee 37402 Assistant U.S. Trustee
2
Patricia C. Foster, Esq. Howard H. Baker, Jr. United States Courthouse 800 Market Street Suite 114 Knoxville, Tennessee 37902 Attorneys for United States Trustee
CARLOCK, COPELAND & STAIR, LLP John C. Rogers, Esq. Lindsey P. Hettinger, Esq. 2600 Marquis Two Tower 285 Peachtree Center Avenue Atlanta, Georgia 30303-1235 Attorneys for Clark & Washington, P.C. and Zachary Burroughs, Esq.
RICHARD STAIR, JR.UNITED STATES BANKRUPTCY JUDGE
3
These contested matters are before the court on the following: (1) in Hart, Case No.
09-36514, the show cause Order entered by the court on December 8, 2009; (2) in McGee, Case No.
10-30353, the Motion of United States Trustee to Compel the Attorneys for the Debtors to Amend
the Disclosure of Compensation and for Sanctions and Notice of Hearing filed on March 1, 2010;
(3) in Lawson, Case No. 09-36177, Newman, Case No. 09-36772, Soles, Case No. 09-36796,
Sanchez, Case No. 09-36802, Dickerson, Case No. 09-36875, Zick, Case No. 09-36938, Cox, Case
No. 10-30169, Hoffman, Case No. 10-30181, Luttrell, Case No. 10-30275, Vittetoe, Case No.
10-30326, Womble, Case No. 10-30382, Aaron, Case No. 10-30442, and Knight, Case No. 10-30444,
the Amended Motion for Sanctions and Other Relief Against the Law Firm of Clark & Washington
and Attorney Zachary Burroughs and Notice of Hearing filed by the United States Trustee on
March 19, 2010; and (4) in Lawson, Case No. 09-36177, Newman, Case No. 09-36772, Soles, Case
No. 09-36796, Sanchez, Case No. 09-36802, Dickerson, Case No. 09-36875, Zick, Case No.
09-36938, Cox, Case No. 10-30169, Hoffman, Case No. 10-30181, Luttrell, Case No. 10-30275,
Vittetoe, Case No. 10-30326, and Womble, Case No. 10-30382, the Motion for Sanctions Pursuant
to 11 U.S.C. § 105(a) Against Clark & Washington, P.C. and Zachary Burroughs for Violations of
Local Rule 2090-2 and General Order 2008-005 filed by the United States Trustee on April 1, 2010.
Pursuant to the Pretrial Order entered on May 14, 2010, and amended on July 1, 2010, these
fifteen cases were consolidated for trial on the issues raised, and the trial was held on July 13 and
14, 2010. The record before the court consists of stipulated exhibits and facts as set forth in the
Stipulations of Undisputed Facts (Joint Stipulations) filed by the parties on July 2, 2010, ninety-
seven exhibits admitted into evidence, including the deposition testimony of two unavailable
4
witnesses, Reem Boualem and Sandra Lamb, and the testimony at trial of four witnesses, all of
whom are employed by Clark & Washington, P.C.: Zachary Burroughs, managing attorney for the
Knoxville office, Emory Clark, founding and managing partner, Richard Thomson, supervising
partner, and Amanda Stofan, managing attorney for the Chattanooga office. 1
This is a core proceeding. 28 U.S.C. § 157(b)(2)(A), (O) (2006).
I
Clark & Washington, P.C. (Clark & Washington) is a law firm based out of Atlanta,
Georgia. It was founded in 1983 by Emory Clark, who serves as managing partner, focusing2
primarily upon the administration and financial aspects of the firm. It employs approximately fifty-
four attorneys and operates offices in six cities: Atlanta, Georgia, Tampa and Orlando, Florida, and
Nashville, Chattanooga, and Knoxville, Tennessee. The Knoxville office, which was opened in
2006, consists of four separate branches, with the primary location at 5401 Kingston Pike. The3
Knoxville office employs six attorneys and thirteen staff members, and its sole practice area is
consumer bankruptcy. Zachary S. Burroughs is the managing attorney. He graduated from law
school in 2004, has been a practicing attorney for approximately five years, and was made managing
Included among the stipulated exhibits are transcripts of examinations of various of the Debtors taken pursuant1
to Rule 2004 of the Federal Rules of Bankruptcy Procedure and transcripts of testimony given by various of the Debtors
at their creditors’ meetings. The parties agreed that, rather than require the individual Debtors to testify, the court could
consider their testimony as given during those proceedings.
The firm has eight partners, seven of whom reside in Atlanta and one who resides in Tampa.2
For the purposes of this Memorandum, the court will refer collectively to Clark & Washington’s Knoxville3
offices as “Knoxville office.”
5
attorney for Clark & Washington’s Knoxville office following the departure of its former managing
attorney, Steven F. Crawford, in late November 2009.
In order to properly analyze the issues raised in these contested matters, it is necessary to
revisit, briefly, the facts and issues addressed by the court in In re Waldo, 417 B.R. 854 (Bankr. E.D.
Tenn. 2009) which, as in these cases, centered around Clark & Washington’s fee arrangements with
debtors in seven Chapter 7 cases. Specifically, the primary issues confronting the court in Waldo
were whether Clark & Washington was collecting discharged fees from its clients and the firm’s
failure to disclose the true nature of its fee arrangements in the Disclosure of Compensation of
Attorney for Debtor(s) Statements (Compensation Disclosure Statements) being filed with the court.
The Waldo cases came before the court through various motions filed by the United States Trustee
(U.S. Trustee) asking the court to enter an order requiring Clark & Washington and its attorneys to
amend the Compensation Disclosure Statements filed in each case to accurately reflect the fee
arrangement with those debtors; to amend the Schedule F filed in each case to list Clark &
Washington as a creditor for unpaid pre-petition legal fees; and seeking sanctions against Clark &
Washington and Steven Crawford, its managing attorney at that time, in the form of disgorgement
of all fees collected through the post-petition and post-discharge cashing of post-dated checks
received from the debtors in each case as well as all attorneys’ fees paid pre-petition. Following
preliminary hearings and the agreement to consolidate the cases for adjudication, the issues in Waldo
were defined as follows: (1) what was the nature of Clark & Washington’s engagement contract
with each of its clients as to whether its fees were a flat fee or bifurcated fee and if that agreement
complied with the Bankruptcy Code; (2) whether the original Compensation Disclosure Statements
6
accurately reflected the contract between Clark & Washington and the respective debtors; (3)
whether depositing a post-dated check or corresponding with debtor clients post-petition, including
phone calls and letters concerning attorneys’ fees not paid due to insufficient funds, violated the
automatic stay pursuant to 11 U.S.C. § 362(a)(6) and/or 11 U.S.C. § 524's permanent injunction; (4)
whether Clark & Washington advised debtor clients that pre-petition attorneys’ fees are among the
kind that are discharged in bankruptcy; and (5) because Clark & Washington failed to advise debtor
clients that their pre-petition attorneys’ fees would be discharged in their bankruptcy cases, whether
it should be ordered to disgorge their fees pursuant to 11 U.S.C. § 329(b).
The Waldo Memorandum and Order were filed on October 27, 2009. In its thorough
memorandum opinion, this court resolved several issues, including issues that have been raised in
these fifteen contested matters relating to the acceptance of post-dated checks as payment for
attorneys’ fees, the necessity of a full and accurate disclosure of compensation, and the
dischargeability of attorneys’ fees incurred pre-petition. One such issue resolved by Waldo was
whether Clark & Washington’s engagement contract provided for payment of a flat fee or a fee
bifurcated into pre- and post-petition services. The court concluded that notwithstanding the
statements at the end of each contract executed by the respective debtors that they “acknowledge and
agree that this retainer contract contemplates payment for services rendered pre-Petition as well as
services to be rendered post-Petition[,]” the attorneys’ fees were not bifurcated. Waldo, 417 B.R.
at 883. Based on the opening paragraph of the contracts, providing that “It is hereby agreed by the
undersigned ‘Attorney’ and ‘Client’ that Attorney shall represent Client in a case under Title 11 USC
Chapter 7. Client agrees to an attorney fee of _____[,]” and the rule of law in Tennessee that
7
contracts are construed as of the date upon which they are made, this court held that, irrespective of
when services were to be rendered, the engagement contracts between Clark & Washington and the
respective Waldo debtors clearly provided for payment of a non-refundable flat fee prior to the filing
of the petitions and the obligation of each debtor to pay the fees arose at the time the contract was
executed. Waldo, 417 B.R. at 878, 883. Accordingly, having found that Clark & Washington’s fees
were pre-petition flat fees, this court joined the majority of other courts and also held that any unpaid
attorneys’ fees under the flat fee arrangement between Clark & Washington and the Waldo debtors
were dischargeable, a fact of which Clark & Washington was required to advise its clients but had
neglected to do so. Waldo, 417 B.R. 885.
With respect to the issue of accepting post-dated checks from debtor clients, Waldo
unambiguously holds that “because ‘flat fee’ or ‘no-look’ attorneys’ fees contracted for pre-petition
are dischargeable, it is unacceptable for attorneys to ask for and receive post-dated checks from
debtors to be cashed post-petition as payment of those fees.” Waldo, 417 B.R. at 886 (citing cases).
The decision also delved into the potential ethical implications of accepting post-dated checks,
analyzing the practice in the context of Rule 1.8(a) of the Tennessee Rules of Professional Conduct
which prohibits attorneys from acquiring an ownership, possessory, security, or other pecuniary
interest adverse to their clients’ interests. Waldo, 417 B.R. at 886 (quoting TENN. SUP. CT. R. 8,
Rule 1.8(a)). Although this court declined to find that acceptance of post-dated checks from debtors
created “a per se conflict of interest between attorneys and debtors due to the ‘credit transactions’
between them, the practice at least raises the question and the appearance of such a conflict since the
information concerning potential dischargeability of the fees was not disclosed to the Debtors
8
whereby they could seek additional legal advice, and they did not consent, in writing, to acceptance
of this potential conflict.” Waldo, 417 B.R. at 887.
Waldo also addressed the automatic stay and discharge injunction aspects associated with
accepting payment of attorneys’ fees through post-dated debtor checks. Following discussion of
recent Sixth Circuit precedent concerning presentment of checks and the automatic stay’s exception
for the presentment of negotiable instruments at 11 U.S.C. § 362(b)(11) (2006), this court found that
although presentment of the debtors’ post-dated checks for payment during the pendency of the
bankruptcy case did not violate the automatic stay, attempts to collect payment on checks that had
been returned unpaid due to insufficient funds did violate the stay. Waldo, 417 B.R. at 889-90.
Additionally, with respect to the discharge injunction imposed by 11 U.S.C. § 524(a) (2006), the
decision points out that § 524(a) contains no such exception, thus all of Clark & Washington’s post-
discharge attempts to collect payment from debtors for NSF checks violated the discharge injunction,
as did the post-discharge presentment of post-dated debtor checks for payment. Waldo, 417 B.R.
at 891.
Finally, Waldo addresses the compensation disclosure requirements of 11 U.S.C. § 329(a)
(2006) and Rule 2016(b) of the Federal Rules of Bankruptcy Procedure, reinforcing the importance
and necessity for accurate disclosure of compensation received by attorneys from debtors in order
to “enable[] courts to carefully scrutinize compensation paid to debtors’ attorneys, providing
protection to debtors and creditors and preventing overreaching by attorneys.” Waldo, 417 B.R. at
892-93 (citing Jensen v. United States Trustee (In re Smitty’s Truck Stop, Inc.), 210 B.R. 844, 848
(B.A.P. 10 Cir. 1997). This court also held that “[t]he failure to comply with the disclosure rulesth
9
is a sanctionable violation, even if proper disclosure would have shown that the attorney had not
actually violated any Bankruptcy Code provision or any Bankruptcy Rules[.]” Waldo, 417 B.R. at
893 (quoting In re Campbell, 259 B.R. 615, 627 (Bankr. N.D. Ohio 2001) (quoting Neben & Starrett,
Inc. v. Chartwell Fin. Corp. (In re Park-Helena Corp.), 63 F.3d 877, 880 (9 Cir. 1995)).th
As a result of its actions giving rise to the seven Waldo cases, Clark & Washington was
required to disgorge all attorneys’ fees received from the debtors in those cases and was required to
refund service charges collected for debtor checks that were returned for insufficient funds. Clark
& Washington disgorged all fees as required under Waldo and additionally voluntarily refunded
$123,742.00 in actual or potential fees attributable to other similarly situated cases, by returning
outstanding post-dated checks in its possession. COLL. TRIAL EX. 147 ¶ 8. Additionally, Clark &
Washington revised its Chapter 7 Attorney-Client Agreement (Engagement Contract) with respect4
to its attorneys’ fees to be paid for services rendered in association with its representation of debtors
in Chapter 7 cases. See TRIAL EX. 100.
As it relates to the issues raised in these fifteen contested matters, the initial Clark &
Washington post-Waldo six page, single-spaced engagement contract, which outlines the debtors’
duties as well as those of Clark & Washington, provides, inter alia, the following:
I. Pre-Petition Fees and Services:
a. Attorney offers and advertises a free consultation to prospective bankruptcyclients. Much of that initial consultation involves information gathering andinterviews with clients regarding their debts, assets, financial circumstances, and
In each section of this Memorandum, the court will refer to each Debtors’ respective engagement agreement4
with Clark & Washington as “Engagement Contract” and will not repeatedly designate this reference in the subsection
for each Debtors’ cases.
10
transactions. Consequently, a large portion of Client’s case intake was performedduring the initial consultation. There is no charge for this service.
b. The balance of the pre-Petition fee covers the remaining services required to assistClient in obtaining their required credit counseling certificate, gathering necessaryinformation and documents, advising Client regarding the legal issues involved inClient’s case, advising Client of the upcoming process, advising Client of theirresponsibilities as a debtor, and preparing and filing Client’s bankruptcy pleadings. The fee for these services is a flat fee of $ .
ANY FEE RELATING TO PRE-PETITION SERVICES WHICH IS NOT PAIDPRIOR TO THE FILING OF CLIENT’S CASE IS SUBJECT TO BEINGDISCHARGED IN CLIENT’S CASE. ACCORDINGLY, ATTORNEY WILLWAIVE ANY ATTORNEY FEE FOR PRE-PETITION SERVICES WHICH HASNOT BEEN PAID PRIOR TO THE FILING OF CLIENT’S PETITION.
II. Post-Petition Fees and Services:
a. Retainer. As a condition of representation in this case, Client agrees to payAttorney a retainer for services to be rendered post-Petition in Client’s case. Theretainer shall consist of post-dated checks in the total amount of $_________.
This retainer shall be applied to the post-Petition services to be rendered by Attorneyin Client’s case. These services include, but are not limited to, those services listedin paragraph b. below. The retainer is based upon a blended hourly rate of $165. Theamount of the post-Petition fees shall be capped at the amount of the retainer listedabove, regardless of the amount of services expended in excess thereof.
The parties contemplate that the value of the post-Petition services rendered byAttorney in this case shall meet or exceed the total amount of the quoted retainer. Nonetheless, Client is entitled to request a final accounting of the fees charged byAttorney in this case and thereafter receive a refund of any amount of the retainerpaid in excess of the value of the post-Petition services rendered.
CLIENT IS ADVISED THAT THE USE OF POST-DATED CHECKS FOR POST-PETITION PAYMENT OF A PRE-PETITION CHAPTER 7 ATTORNEY FEE ISNOT ALLOWED IN THE MAJORITY OF JURISDICTIONS. TO ATTORNEY’SKNOWLEDGE, THE ACCEPTANCE OF POST-DATED CHECKS AS ARETAINER AGAINST SPECIFICALLY-SEGREGATED, POST-PETITIONSERVICES HAS NOT BEEN DISALLOWED. NONETHELESS, CLIENT MIGHTWISH TO CONSULT INDEPENDENT COUNSEL IN THIS REGARD.
11
b. Post-Petition Services: The post-Petition services to be rendered by Attorney inClient’s case include, but are not necessarily limited to, the following:
i. Notifying specific creditors of Client’s case;
ii. Filing Notices of Stay in any other court or tribunal where an action ispending against Client;
iii. Mailing Client a copy of all petitions, notices and pleadings filed onClient’s behalf;
iv. Notifying Client of all court hearings, meetings, or other proceedingsscheduled in Client’s case;
v. Consulting with Client about any questions or problems that might ariserelating to Client’s case;
vi. Preparing for, attending, and representing Client in all required courthearings or other proceedings in Client’s case;
vii. Preparing and filing any and all pleadings and other documents which arenecessary or appropriate in the prosecution of Client’s case;
viii. Advising Client of their responsibilities as a debtor;ix. Assisting/advising Client in carrying-out their statement of intentions;
x. Assisting Client in obtaining and filing the required pre-dischargefinancial management certificate; and,
xi. Assisting Client in cooperating with requests by the panel trustee, UST,or the Court.
c. “CarveOuts”:
i. These fees do not include court filing costs. Client shall be responsible forall court and credit counseling costs associated with this case.
ii. Client agrees to pay an additional fee of $100.00 plus applicable courtcosts for each amendment filed, post-petition, to include, list, or disclose anyinformation which Client failed to provide to Attorney prior to the filing ofClient’s case.
12
iii. Adversary Proceedings: the parties specifically agree that the servicescontemplated in this contract of employment DO NOT include representingClient, either as a Plaintiff or Defendant, in any adversary proceeding filedin or in connection with this case. Should Attorney agree to represent Clientin an adversary proceeding, a different contract of employment shall beexecuted between the parties under such terms and conditions as the partiesdeem mutually acceptable. If Client is served with an adversary proceedingcomplaint, Attorney shall take appropriate steps to protect Client’s bestinterests until such time as either Client informs Attorney that Client does notwish to litigate the matter, Client declines to retain Attorney, Client obtainsother counsel, or Attorney is allowed to withdraw by the Court.
TRIAL EX. 100. At trial, Mr. Thomas testified that he personally drafted the “straddle” contract at
the end of October 2009, in an attempt to comply with the court’s directives in Waldo by removing
the non-refundable nature of the fees, adding the language advising that pre-petition attorneys’ fees
were potentially subject to discharge, adding the language concerning the potential conflict with
taking post-dated checks in some jurisdictions, and removing all carve-outs other than adversary
proceedings and post-petition amendments. Believing that the “straddle” contract was in compliance
with Waldo and after instituting the new engagement arrangements, Clark & Washington’s
Knoxville office once again began accepting, as one of its methods for payment of attorneys’ fees,
post-dated checks from debtors in addition to payments from third parties, payment in full prior to
filing, or providing services pro bono. JT. STIPS. ¶ 2.
Approximately three weeks later, Mr. Thomas once again revised Clark & Washington’s
engagement contract, removing subsection ii. accessing the additional fee for filing amendments
contained in the “CarveOuts” section, stating it did not fit in with the spirit of a “straddle” contract
and that it caused problems with their clients. See TRIAL EX. 101. No other changes were made to
13
the second post-Waldo form Chapter 7 Attorney Client Agreement, and the firm continued taking
post-dated checks from debtors as payment for Chapter 7 bankruptcy cases. 5
After noting that Clark & Washington was continuing to take post-dated checks from debtors,
drawn on their bank accounts, the court entered an Order in Hart on December 8, 2009, directing
Mr. Burroughs and Clark & Washington to appear and show cause why their compensation should
not be limited to the $201.00 received from the Debtors pre-petition, why they should not be required
to return all post-dated checks to the Debtors, and why the court should not summarily disallow all
compensation purportedly paid by post-dated checks and direct the return thereof to the respective
debtors in all Chapter 7 cases filed after entry of the Waldo decision on October 27, 2009. As
required by the court in its show cause order, Mr. Burroughs and Clark & Washington filed a brief
on January 7, 2010, arguing, inter alia, that they had attempted to comply with the court’s directives
in Waldo and that the post-dated checks received from the Debtors were a retainer against post-
petition services.
On March 19, 2010, the U.S. Trustee filed the Motion for Sanctions and Other Relief Against
the Law Firm of Clark & Washington and Attorney Zachary Burroughs and Notice of Hearing (First
Motion for Sanctions) in Lawson, Newman, Soles, Sanchez, Dickerson, Zick, Cox, Hoffman, Luttrell,
Vittetoe, Womble, Aaron, and Knight, asking the court to enter an order finding Mr. Burroughs and
Clark & Washington in contempt and ordering them to disgorge any prepaid or post-paid fees
collected for filing inaccurate compensation disclosure statements, for failing to adequately disclose
Unless expressly stated otherwise in the individual subsections forthcoming, each of the Debtors entered into5
one of the two initial post-Waldo engagement contracts with Clark & Washington, and it will be noted in each subsection
which version of the contract was used for each of the Debtors.
14
that unpaid attorneys’ fees were potentially dischargeable, and for violating the court’s decision in
Waldo. Additionally, the U.S. Trustee requested sanctions such as requiring all compensation6
disclosure statements filed by Clark & Washington to contain an original signature of a partner,
shareholder, or principal, requiring the firm to filing an accounting of all billable time for non-flat
fee cases, requiring fifteen additional CLE hours for each attorney in the firm’s Knoxville office,
assignment of a court-approved co-counsel to review all filings by Clark & Washington, and
suspension from practicing before the court for a time to be determined.
Thereafter, on April 1, 2010, the U.S. Trustee filed the Motion for Sanctions Pursuant to 11
U.S.C. § 105(a) Against Clark & Washington, P.C., and Zachary Burroughs for Violations of Local
Rule 2090-2 and General Order 2008-005 (Second Motion for Sanctions) in Lawson, Newman,
Soles, Sanchez, Dickerson, Zick, Cox, Hoffman, Luttrell, Vittetoe, and Womble, asking the court to
find Clark & Washington and Mr. Burroughs in violation of the Tennessee Rules of Professional
Conduct for failing to obtain an original signature from the Debtors prior to filing the amended
Statement of Financial Affairs on March 4, 2010. The U.S. Trustee requested imposition of
sanctions, including suspension of the firm’s electronic signature filing privileges, requiring the
firm’s attorneys to complete additional CLE courses, and suspension of Clark & Washington’s
attorneys from practice before the court for a time period to be determined.
On that same date, in Lawson, Newman, Sanchez, Dickerson, and Zick, the U.S. Trustee filed an Amended6
Motion for Sanctions and Other Relief Against the Law Firm of Clark & Washington and Attorney Zachary Burroughs
and Notice of Hearing for the sole purpose of amending the caption and the certificate of service; however, no revisions
or amendments were made to the motion or the U.S. Trustee’s substantive argument.
15
Following the filing of the Second Motion for Sanctions, the court entered an Order directing
Clark & Washington and Mr. Burroughs to file a response by April 15, 2010. The Response of Clark
and Washington, P.C. and Zachary Burroughs to U.S. Trustee’s Motions for Sanctions (Response)
was filed on April 12, 2010. In the Response, Clark & Washington and Mr. Burroughs
acknowledged that they filed inaccurate initial Compensation Disclosure Statements in Lawson,
Hart, Newman, Soles, Sanchez, Dickerson, Zick, Cox, Hoffman, Luttrell, Vittetoe, McGee, and
Womble, but contended the errors were inadvertent and corrected when they filed amended
Compensation Disclosure Statements. Clark & Washington and Mr. Burroughs also acknowledged
that in Lawson, Newman, Soles, Sanchez, Dickerson, Zick, Cox, Hoffman, Luttrell, Vittetoe, and
Womble, they filed amended Statements of Financial Affairs without first obtaining handwritten
signatures from the Debtors and that doing so was wrong but denied that they intended to mislead
the court. With respect to the sanctions sought by the U.S. Trustee, Clark & Washington and Mr.
Burroughs averred that they had taken steps to ensure that neither error occurred in the future,
including changes to their procedure for filing compensation disclosure statements subject to review
by a partner. Additionally, they agreed that disgorgement was an appropriate supplemental sanction
to their self-imposed sanction whereby they previously disgorged $123,742.00 in fees in an attempt
to comply with the Waldo opinion but argued that any additional sanctions sought by the U.S.
Trustee are not necessary or appropriate.
All matters raised in the U.S. Trustee’s Motions for Sanctions, the McGee Motion, and the
court’s show cause order in Hart were consolidated for trial at the preliminary hearing and continued
hearings held on April 22 and May 13, 2010, respectively. Pursuant to the Pretrial Order entered on
16
May 14, 2010, and amended on July 1, 2010, the issues the court was called upon to resolve are
summarized as follows:
A. whether, since Clark & Washington and Mr. Burroughs acknowledged that the
Rule 2016(b) compensation disclosure statements filed with the court in Lawson, Hart,
Newman, Soles, Sanchez, Dickerson, Zick, Cox, Hoffman, Luttrell, Vittetoe, McGee, and
Womble did not accurately reflect the fee arrangements with the respective Debtors,
disgorgement is the appropriate sanction;
B. whether the Chapter 7 Attorney-Client Agreement utilized by Clark & Washington
and Mr. Burroughs and executed by the Debtors in Zick, Hart, Newman, and Sanchez
violated Waldo;
C. whether the Chapter 7 Attorney-Client Agreement for Routine Cases Under 11
U.S.C. Chapter 7 utilized by Clark & Washington and Mr. Burroughs and executed by the
Debtors in Soles violated Waldo;
D. whether the Chapter 7 Attorney-Client Agreement utilized by Clark & Washington
and Mr. Burroughs and executed by the Debtors in Dickerson, Lawson, Cox, Hoffman,
Luttrell, Vittetoe, Womble, Aaron, and Knight violated Waldo;
E. whether fees allowed to Clark & Washington and Mr. Burroughs should be limited
to those received pre-petition under any of the foregoing Attorney-Client Agreements;
F. whether Clark & Washington and Mr. Burroughs adequately informed each of the
Debtors that any attorneys’ fees not paid prior to the filing of their bankruptcy cases were
potentially dischargeable, as required by Waldo, and if not, whether they should be held in
contempt;
17
G. whether Clark & Washington and Mr. Burroughs violated 11 U.S.C. § 526(a)(4)
(2006), the court’s decision in Waldo, and/or Tennessee Supreme Court Rule 8, RPC 1.8 by
offering and accepting payment terms from the Debtors by allowing the tender of post-dated
checks from the Debtors themselves and/or from third parties;
H. whether the Chapter 7 Attorney-Client Agreement utilized by Clark & Washington
and Mr. Burroughs and executed by the Debtors in Dickerson, Zick, Cox, Hoffman, Luttrell,
Vittetoe, Womble, Aaron, and Knight constitutes a true “straddle” arrangement for the
division of pre- and post-petition fees and services, and if so:
(1) whether the fees charged by Clark & Washington and Mr. Burroughs for
pre- and/or post-petition services exceed the reasonable value of the services
rendered;
(2) whether Clark & Washington and Mr. Burroughs have a duty to provide
an accounting and/or itemized statement of services rendered to debtors;
(3) whether Clark & Washington and Mr. Burroughs were required by Rule
2016(b) or the Federal Rules of Bankruptcy Procedure to file a supplemental
compensation disclosure statement each time additional post-petition fees were paid;
I. whether the depositing and/or cashing by Clark & Washington and Mr. Burroughs
of post-dated checks received from the Debtors post-discharge violated the discharge
injunction of 11 U.S.C. § 524(a) (2006);
J. whether, since Clark & Washington and Mr. Burroughs acknowledged that they
prepared and filed an Amended Statement of Financial Affairs in Lawson, Newman, Soles,
Sanchez, Dickerson, Zick, Cox, Hoffman, Luttrell, Vittetoe, and Womble without first
18
obtaining the Debtors’ permission and/or handwritten signature, as required by section
III.A.3 of the Administrative Procedures for Electronic Case Filing, effective May 17, 2005,
as amended, disgorgement is the appropriate sanction.
K. whether, if the court finds in the affirmative that Clark & Washington and Mr.
Burroughs have committed any of the foregoing actions, disgorgement is an adequate
sanction or whether other forms or additional sanctions are warranted, including, as
requested by the United States Trustee: the disallowance of fees in their entirety, termination
of Clark & Washington and Mr. Burroughs’ status as Registered Users of the court’s
electronic case filing system, requiring all attorneys with Clark & Washington to attend
continuing legal education courses supplemental to those required by the State of Tennessee,
and/or the suspension of Clark & Washington and its attorneys to practice law in the United
States Bankruptcy Court for the Eastern District of Tennessee.
The undisputed facts and issues raised by the parties in each bankruptcy case are detailed as
follows.
James Scott Lawson and Kerri McCon Lawson(Case No. 09-36177)
On November 3, 2009, James Scott Lawson and Kerri McCon Lawson retained Clark &
Washington to represent them in the filing of their Chapter 7 bankruptcy case, executing in
association with this representation the initial post-Waldo Engagement Contract. TRIAL EX. 9; see
also TRIAL EX. 100. As to the specific fees for services to be rendered in the filing of their
bankruptcy case, the Lawsons’ Engagement Contract contains the following terms:
19
Client agrees to pay the following fees:
I. Pre-Petition Fees and Services:
. . . .
b. The balance of the pre-Petition fee covers the remaining services required to assistClient in obtaining their required credit counseling certificate, gathering necessaryinformation and documents, advising Client regarding the legal issues involved inClient’s case, advising Client of the upcoming process, advising Client of theirresponsibilities as a debtor, and preparing and filing Client’s bankruptcy pleadings. The fee for these services is a flat fee of $800.00.
. . . .
II. Post-Petition Fees and Services:
a. Retainer. As a condition of representation in this case, Client agrees to payAttorney a retainer for services to be rendered post-Petition in Client’s case. Theretainer shall consist of post-dated checks in the total amount of $_________.[ ]7
TRIAL EX. 9. At that time and in accordance with the payment options offered, the Lawsons tendered
to Clark & Washington, as payment of the $800.00 attorneys’ fee provided for by their Engagement
Contract, five post-dated checks from Jordan J. Perleoni, each in the amount of $160.00, for deposit
into Clark & Washington’s operating account on December 31, 2009, January 31, 2010, February 28,
2010, March 31, 2010, and April 30, 2010, respectively. JT. STIPS. ¶¶ 1-2; TRIAL EX. 10. Clark &
Washington did not specifically instruct the Lawsons to incur debt to pay their fees but advised that
they could finance the fee for a period of time after the case was filed through post-dated checks.
JT. STIPS. ¶ 3.
The amount is blank in the Engagement Contract entered into evidence as Trial Exhibit 9.7
20
The Voluntary Petition commencing the Lawsons’ Chapter 7 bankruptcy case was filed on
November 10, 2009. Filed contemporaneously with the Voluntary Petition was the Lawsons’8
Statement of Financial Affairs, reflecting in response to question 9 concerning payments related to
debt counseling or bankruptcy that their $800.00 attorneys’ fee was paid “[f]rom third-party payor,9
Jordan J. Perleoni, via post-dated checks; to be paid at $160.00 per month on 12/31/09, 01/31/10,
02/28/10, 03/31/10, and 04/30/10.” COLL. TRIAL EX. 5. This information is also reflected on the
Compensation Disclosure Statement executed and filed by Mr. Crawford on November 10, 2009,
which discloses total compensation of $800.00, with $800.00 paid and a balance due of $0.00, paid
“by third party Jordan J. Perleoni via post-dated checks; to be paid at $160 per month on 12/31/09,
01/31/10, 02/28/10, 03/31/10, 4/30/10.” COLL. TRIAL EX. 6. The Compensation Disclosure
Statement also reflects the following in paragraphs 6 and 7:
6. In return for the above-disclosed fee, I have agreed to render legal service for allaspects of the bankruptcy case, including:
a. Analysis of the debtor’s financial situation, and rendering advice to thedebtor in determining whether to file a petition in bankruptcy; b. Preparation and filing of any petition, schedules, statement of affairs andplan which may be required;c. Representation of the debtor at the meeting of creditors and confirmationhearing, and any adjourned hearings thereof;d. [Other provisions as needed]
no limitation except as set forth in paragraph 7 below.
Although the Lawsons executed their documents on November 3, 2009, the Voluntary Petition is dated8
November 10, 2009, the date upon which the case was filed. See COLL. TRIAL EX. 5. At trial, Mr. Burroughs testified
that, due to an error in the software program, the dates defaulted to the filing date rather than the actual signature date.
Question 9 directs debtors to “[l]ist all payments made or property transferred by or on behalf of the debtor9
to any persons, including attorneys, for consultation concerning debt consolidation, relief under the bankruptcy law or
preparation of the petition in bankruptcy within one year immediately preceding the commencement of [the] case.”
COLL. TRIAL EX. 5. All references in this Memorandum to “question 9” refer to this question in the Statement of
Financial Affairs, and references will not be made back to this footnote.
21
(i). Other provisions: This fee for pre-petition services is a flat feein the amount of $______. The fee for post-Petition services shall becapped at $_______, and charged at a blended rate of $165 per hour. Debtor has provided counsel a retainer for the post-Petition servicesin the form of post-dated checks in the total amount of $________.[ ]10
7. By agreement with the debtor(s), the above-disclosed fee does not include thefollowing service:
a. There will be an additional charge of $100 plus applicable court costs forthe preparation, filing and service of any amendment which is required to addor disclose any required information which should have been provided tocounsel prior to the filing of the case.b. The contract between the parties does not include representation inadversary proceedings.
COLL. TRIAL EX. 6. On November 12, 2009, Mr. Crawford filed an amended Compensation
Disclosure Statement dated November 11, 2009, changing the balance due amount from $0.00 to
$800.00 and completing the retainer portion of paragraph 6 to reflect $0.00 for pre-petition fees,
$800.00 for post-petition fees, and no retainer. COLL. TRIAL EX. 6. Thereafter, on March 4, 2010,
Mr. Burroughs filed a second amended Compensation Disclosure Statement dated March 1, 2010,
with the paragraph 6 language deleted in its entirety and the paragraph 7 language revised to read:
7. By agreement with the debtor(s), the above-disclosed fee does not include thefollowing service:
a. These fees do not include certain costs associated with this case. Clientwill be responsible for all court costs, credit counseling costs, and the coststo obtain Client’s credit report. b. The contract between the parties does not include fees for representingClient in adversary proceedings. If Client is served with an adversaryproceeding complaint, Attorney shall take appropriate steps to protect andrepresent Client’s best interests until such time as either Client informsAttorney that Client does not wish to litigate the matter, Client affirmatively
These amounts are blank in the Compensation Disclosure Statement entered into evidence as the first10
document in Collective Trial Exhibit 6.
22
declines Attorney’s representation, Client obtains other counsel, or Attorneyis allowed to withdraw by the Court.
TRIAL EX. 7.
Mr. Burroughs also filed an amended Statement of Financial Affairs on behalf of the
Lawsons on March 4, 2010, listing at question 9 the individual $160.00 checks tendered to Clark &
Washington by Jordan Perleoni dated December 31, 2009, January 31, 2010, February 28, 2010,
March 31, 2010, and April 30, 2010, the dates upon which the post-dated checks were to be
deposited. TRIAL EX. 8. The amended Statement of Financial Affairs contains the Debtors’
electronic signatures but was filed by Mr. Burroughs without first obtaining the Lawsons’
handwritten signatures. JT. STIPS. ¶ 4.
The U.S. Trustee took the 2004 examination of the Lawsons on February 9, 2010. In
response to questions concerning their attorney fee arrangements with Clark & Washington, and
specifically regarding the payment of those fees through third-party post-dated checks, Ms. Lawson
testified as follows:
Q. So the first time you met with them [Clark & Washington], about the second orthird week of October, that you just discussed the fee arrangement, and what did theytell you that arrangement would be, besides the amount?
A. That at that point, you all hadn’t decided on the law. He said that it was just theycould do five posted checks at $160 a month from us. And then when we came backthe second time, which technically would be the first time for filing the petition,that’s when they told us about the law, and that it had to be a third party. So then wecame back a third time with our third party checks.
Q. Okay. Now let’s talk about those third-party checks. Who was the third partythat wrote the checks?
A. A friend of ours. Jordan Perlioni.
23
Q. Okay. And did he offer to pay for your bankruptcy?
A. No, ma’am. We have to pay him back.
Q. Okay. Now how do you pay him back?
A. We pay him back with cash. We just take it out of our budget for the wholemonth and give it to him, and then he puts his – puts that cash into the account wherethe checks are coming out of, and it gets paid that way.
Q. So he didn’t really offer to make the payments.
A. No.
Q. So why do you suppose you had to do this with a third-party check? I meanhaving it from a friend, when you’re actually making the payment yourself?
A. Well, from what they told – what Mitch [Chessman] told us was that our debt,our attorney’s fees, would be canceled out in the bankruptcy. And then at that point,I’m assuming that people weren’t paying their attorney’s fees like they had originallyagreed to. So the third party which we had gone to and said, “hey can you help uswith this,” and we made the agreement with him.
. . . .
Q. So in fact he’s not really paying your bankruptcy?
A. No. He’s just – his name is on the check.
COLL. TRIAL EX. 11 [K. Lawson] pg.8, ln.10-pg.10, ln.9. Ms. Lawson’s testimony was echoed by
Mr. Lawson, who testified that Mr. Perleoni, a long-time friend, provided them with the post-dated
checks at their request after they were advised by Clark & Washington that the options for payment
of the attorney fees were either in full up front or through a third party:
Q. And did you ask him if he could fund you the money to pay up front for yourbankruptcy?
A. The way I’d explained it to him is that we needed the third-party checks and thatI would give him the money before the check cleared to make sure it was in hisaccount.
24
Q. Okay. Who made that suggestion that you do it that way?
A. I’m not sure I understand.
Q. Well, did someone suggest to you that you could get a third-party – you could justagree to make payments to them and let them provide the checks, or did you comeup with that idea all by yourself?
A. We were told that the attorney’s office would need third-party checks to – eitherup front or a third party. We were explained that it couldn’t be our post-datedchecks. I called Jordan on the phone and told him what the deal was and told him,just to let you know, I’m going [to] make sure the money – or I’m going to give youthe money before the checks clear. That way he doesn’t have to worry about makingsure his money is there.
Q. Okay. Did you call him from the attorney’s office or from your home?
A. I believe I called him from the attorney’s office, right after we spoke to them andthey told me that they would need third-party checks.
COLL. TRIAL EX. 11 [J. Lawson] pg.4, ln.17-pg.6, ln.2.
During the Rule 2004 examination, the Lawsons identified and/or reviewed their contract
with Clark & Washington and, with respect to what they understood the contract to provide as to the
attorney fees they were paying, Ms. Lawson testified to the following:
Q. When you met with your attorneys, did they tell you how much they were goingto charge you for doing the pre-petition work – that means the work up until theyfiled your case – and how much they were going to charge you for the post-petitionwork?
A. They just said everything would be in that $800. Everything would be includedin that.
Q. So they told you that was a flat fee for filing the bankruptcy basically?
A. For the initial filing. If we had to do an amendment or anything like that, therewere additional fees, which I believe I’ve got a copy of.
25
. . . .
Q. And do you recall that the terms were in this document that you would pay$800 – a pre-petition fee of $800 that covers the remaining services? Is thatcorrect? . . . .
. . . .
A. Yes, ma’am.
Q. Okay. And as for post-petition fees and services, the amount was zero, wasn’tit? There’s nothing there?
A. There’s – they said the $800 would cover all of it.
Q. Okay.
A. They didn’t specify exactly how much went to which.
COLL. TRIAL EX. 11 [K. Lawson] at pg.15, ln.11-22; pg.18, ln.15-pg.19, ln.6. Finally, with respect
to the services rendered by Clark & Washington, Mr. Lawson testified that the majority of the work
in their case was done pre-petition. COLL. TRIAL EX. 11 [J. Lawson] pg.10, ln.7-22.
The Lawsons received a discharge on March 1, 2010. Based upon the estimated time records
prepared by Clark & Washington and attached to Mr. Burroughs’s Affidavit, the firm devoted a total
of 6.2 hours to the Lawsons’ bankruptcy case, of which 3.4 hours were attributed to pre-petition
work and 2.8 hours were attributed to post-petition work. COLL. TRIAL EX. 97. Of the post-petition11
hours, Mr. Burroughs testified at trial that 1.0 hour was actual attorney time. At trial, Mr.12
The attachment to Mr. Burroughs’s Affidavit for the Lawsons’ case reflects a total of 9.2 hours, but that figure11
also includes 0.1 of an hour for a check returned for insufficient funds and 2.9 hours for time attributable to these
contested matters.
The Lawsons paid their entire $800.00 fee post-petition which, based upon the estimated time records,12
translates to $285.71 for the 2.8 post-petition hours, including the 1.0 hour of actual attorney time estimated by Mr.
Burroughs to have been spent on their case.
26
Burroughs testified that the Lawsons’ $800.00 fee was a pre-petition flat fee subject to discharge
irrespective that Clark & Washington had the Lawsons execute the initial post-Waldo engagement
contract; however, the receipt of the Lawsons’ account entered into evidence reflects that a
“replacement” cash payment and two of Mr. Perlioni’s post-dated checks were deposited by Clark
& Washington into their operating account post-petition, with one of those checks deposited by
Clark & Washington post-discharge on April 30, 2010, and that the Lawsons have a balance due of
$160.00. JT. STIPS. ¶ 6; TRIAL EX. 10.
Kenneth James Hart and Carla Dee Hart(Case No. 09-36514)
On November 20, 2009, Kenneth James Hart and Carla Dee Hart retained Clark &
Washington to represent them in the filing of their Chapter 7 bankruptcy case, executing in
association with this representation the initial post-Waldo Engagement Contract. COLL. TRIAL EX.
4; see also TRIAL EX. 100. As to the specific fees for services to be rendered in the filing of their
bankruptcy case, the Harts’ Engagement Contract contains the following terms:
Client agrees to pay the following fees:
I. Pre-Petition Fees and Services:
. . . .
b. The balance of the pre-Petition fee covers the remaining services required to assistClient in obtaining their required credit counseling certificate, gathering necessaryinformation and documents, advising Client regarding the legal issues involved inClient’s case, advising Client of the upcoming process, advising Client of theirresponsibilities as a debtor, and preparing and filing Client’s bankruptcy pleadings. The fee for these services is a flat fee of $201.00.
. . . .
27
II. Post-Petition Fees and Services:
a. Retainer. As a condition of representation in this case, Client agrees to payAttorney a retainer for services to be rendered post-Petition in Client’s case. Theretainer shall consist of post-dated checks in the total amount of $899.00.
COLL. TRIAL EX. 4. At that time and in accordance with the payment options offered, the Harts
tendered to Clark & Washington, as payment of the $1,100.00 attorneys’ fee provided for by their
Engagement Contract, $201.00 along with three post-dated checks in the amount of $220.00 and one
post-dated check in the amount of $239.00, all written on the Debtors’ personal bank account, for
deposit into Clark & Washington’s operating account on December 20, 2009, January 20, 2010,
February 20, 2010 and March 20, 2010, respectively. JT. STIPS. ¶¶ 1-2; COLL. TRIAL EX. 4.
The Voluntary Petition commencing the Harts’ Chapter 7 bankruptcy case was filed on
November 30, 2009. Filed contemporaneously with the Voluntary Petition was the Harts’13
Statement of Financial Affairs, reflecting in response to question 9 that their $1,100.00 attorneys’
fee was paid by them on November 20, 2009. COLL. TRIAL EX. 1. This information is not, however,
reflected on the Compensation Disclosure Statement executed by Mr. Burroughs on November 20,
2009, and filed on November 30, 2009, which disclosed total compensation of $1,100.00, with
$201.00 paid and a balance due of $899.00 to be paid “by debtor via post-dated checks in the amount
of $220 each on 12/20/09, 1/20/10, 2/20/10 and $239 on 3/20/10.” COLL. TRIAL EX. 2. The
Compensation Disclosure Statement also reflects the following in paragraphs 6 and 7:
6. In return for the above-disclosed fee, I have agreed to render legal service for allaspects of the bankruptcy case, including:
See supra n.8. The Harts executed their documents on November 20, 2009, but the Voluntary Petition is13
dated November 30, 2009, the date upon which the case was filed. See COLL. TRIAL EX. 1.
28
a. Analysis of the debtor’s financial situation, and rendering advice to thedebtor in determining whether to file a petition in bankruptcy; b. Preparation and filing of any petition, schedules, statement of affairs andplan which may be required;c. Representation of the debtor at the meeting of creditors and confirmationhearing, and any adjourned hearings thereof;d. [Other provisions as needed]
no limitation except as set forth in paragraph 7 below.(i). Other provisions: This fee for pre-petition services is a flat feein the amount of $201.00. The fee for post-Petition services shall becapped at $899.00, and charged at a blended rate of $165 per hour. Debtor has provided counsel a retainer for the post-Petition servicesin the form of post-dated checks in the total amount of $899.00.
7. By agreement with the debtor(s), the above-disclosed fee does not include thefollowing service:
a. There will be an additional charge of $100 plus applicable court costs forthe preparation, filing and service of any amendment which is required to addor disclose any required information which should have been provided tocounsel prior to the filing of the case.b. The contract between the parties does not include representation inadversary proceedings.
COLL. TRIAL EX. 2. On March 4, 2010, Mr. Burroughs filed an amended Compensation Disclosure
Statement dated March 2, 2010, with the paragraph 6 language deleted in its entirety and the
paragraph 7 language revised to read:
7. By agreement with the debtor(s), the above-disclosed fee does not include thefollowing service:
a. These fees do not include certain costs associated with this case. Clientwill be responsible for all court costs, credit counseling costs, and the coststo obtain Client’s credit report. b. The contract between the parties does not include fees for representingClient in adversary proceedings. If Client is served with an adversaryproceeding complaint, Attorney shall take appropriate steps to protect andrepresent Client’s best interests until such time as either Client informsAttorney that Client does not wish to litigate the matter, Client affirmativelydeclines Attorney’s representation, Client obtains other counsel, or Attorneyis allowed to withdraw by the Court.
29
COLL. TRIAL EX. 2.
Mr. Burroughs also filed an amended Statement of Financial Affairs on behalf of the Harts
on March 4, 2010, listing at question 9 the $201.00 payment received by Clark & Washington from
the Debtors on November 20, 2009, the individual $220.00 checks received by Clark & Washington
from the Harts dated December 20, 2009, January 20, 2010, and February 20, 2010, and the $239.00
check dated March 20, 2010, the dates upon which each of their post-dated checks were to be
deposited. TRIAL EX. 3. The amended Statement of Financial Affairs contains the Debtors’
electronic signatures but was filed by Mr. Burroughs without first obtaining the Harts’ handwritten
signatures. JT. STIPS. ¶ 4.
The Harts received a discharge on March 24, 2010. Based upon the estimated time records
prepared by Clark & Washington and attached to Mr. Burroughs’s Affidavit, the firm devoted a total
of 8.9 hours to the Harts’ bankruptcy case, of which 3.9 hours were attributed to pre-petition work
and 5.0 hours were attributed to post-petition work. COLL. TRIAL EX. 97. Of the post-petition hours,
Mr. Burroughs testified at trial that 1.3 hours were actual attorney time. Of the total $1,100.00 fee,14
the receipt entered into evidence reflects a balance due of $194.00. COLL. TRIAL EX. 4.
The Harts paid $899.00 of their fee for post-petition services which, based upon the estimated time records,14
translates to an hourly rate of $179.80 for the 5.0 post-petition hours, including the 1.3 hours of actual attorney time
estimated by Mr. Burroughs to have been spent on their case.
30
Eva Louise Newman(Case No. 09-36772)
On November 3, 2009, Eva Louise Newman retained Clark & Washington to represent her
in the filing of her Chapter 7 bankruptcy case, executing in association with this representation the
initial post-Waldo Engagement Contract. COLL. TRIAL EX. 29; see also TRIAL EX. 100. As to the
specific fees for services to be rendered in the filing of her bankruptcy case, Ms. Newman’s
Engagement Contract contains the following terms:
Client agrees to pay the following fees:
I. Pre-Petition Fees and Services:
. . . .
b. The balance of the pre-Petition fee covers the remaining services required to assistClient in obtaining their required credit counseling certificate, gathering necessaryinformation and documents, advising Client regarding the legal issues involved inClient’s case, advising Client of the upcoming process, advising Client of theirresponsibilities as a debtor, and preparing and filing Client’s bankruptcy pleadings. The fee for these services is a flat fee of $150.00.
. . . .
II. Post-Petition Fees and Services:
a. Retainer. As a condition of representation in this case, Client agrees to payAttorney a retainer for services to be rendered post-Petition in Client’s case. Theretainer shall consist of post-dated checks in the total amount of $1,100.00.
COLL. TRIAL EX. 29. At that time and in accordance with the payment options offered, Ms. Newman
tendered to Clark & Washington, as payment of the $1,250.00 attorneys’ fee provided for by her
Engagement Contract, $150.00 along with five post-dated checks written on the Debtor’s personal
bank account, each in the amount of $220.00, for deposit into Clark & Washington’s operating
31
account on January 8, 2010, February 5, 2010, March 5, 2010, April 2, 2010, and May 14, 2010,
respectively. JT. STIPS. ¶¶ 1-2; COLL. TRIAL EX. 29.
The Voluntary Petition commencing Ms. Newman’s Chapter 7 bankruptcy case was filed on
December 12, 2009. Filed contemporaneously with the Voluntary Petition was Ms. Newman’s15
Statement of Financial Affairs, reflecting in response to question 9 concerning payments related to
debt counseling or bankruptcy that her $1,250.00 attorneys’ fee was paid by her on December 11,
2009. COLL. TRIAL EX. 26. This information is not, however, reflected on the Compensation
Disclosure Statement executed by Mr. Burroughs on December 11, 2009 and filed on December 12,
2009, which disclosed total compensation of $1,250.00, with $150.00 paid and a balance due of
$1,100.00 to be paid “by debtor via post-dated checks in the amount of $220 each on 1/08/10,
2/05/10, 3/05/10, 4/02/10, and 5/14/10.” COLL. TRIAL EX. 27. The Compensation Disclosure
Statement also reflects the following in paragraphs 6 and 7:
6. In return for the above-disclosed fee, I have agreed to render legal service for allaspects of the bankruptcy case, including:
a. [Other provisions as needed]no limitation except as set forth in paragraph 7 below.(i). Other provisions: This fee for pre-petition services is a flat feein the amount of $150.00. The fee for post-Petition services shall becapped at $1100.00, and charged at a blended rate of $165 per hour. Debtor has provided counsel a retainer for the post-Petition servicesin the form of post-dated checks in the total amount of $1100.00.
7. By agreement with the debtor(s), the above-disclosed fee does not include thefollowing service:
See supra n.8. Ms. Newman executed her documents on December 7, 2009, but the Voluntary Petition is15
dated December 12, 2009, the date upon which her case was filed. See COLL. TRIAL EX. 26.
32
a. These fees do not include certain costs associated with this case. Clientwill be responsible for all court costs, credit counseling costs, and the coststo obtain Client’s credit report. b. The contract between the parties does not include fees for representingClient in adversary proceedings. If Client is served with an adversaryproceeding complaint, Attorney shall take appropriate steps to protect andrepresent Client’s best interests until such time as either Client informsAttorney that Client does not wish to litigate the matter, Client affirmativelydeclines Attorney’s representation, Client obtains other counsel, or Attorneyis allowed to withdraw by the Court.
COLL. TRIAL EX. 27. On February 2, 2010, Mr. Burroughs filed an amended Compensation
Disclosure Statement dated February 1, 2010, with the paragraph 6 language deleted in its entirety.
COLL. TRIAL EX. 27.
Mr. Burroughs also filed an amended Statement of Financial Affairs on behalf of Ms.
Newman on March 4, 2010, listing at question 9 the $150.00 payment received by Clark &
Washington from the Debtor on December 11, 2009, and the individual $220.00 checks received by
Clark & Washington from Ms. Newman dated January 6, 2010, February 5, 2010, March 5, 2010,
April 2, 2010, and May 14, 2010, the dates upon which her post-dated checks were to be deposited.
TRIAL EX. 28. The amended Statement of Financial Affairs contains the Debtor’s electronic
signature but was filed by Mr. Burroughs without first obtaining Ms. Newman’s handwritten
signature. JT. STIPS. ¶ 4.
Ms. Newman attended her meeting of creditors on January 11, 2010, at which time the
attorney for the U.S. Trustee questioned her concerning her fee arrangement with Clark &
Washington. In response to the U.S. Trustee’s request that she explain, in her own words, the terms
of her Engagement Contract, Ms. Newman answered as follows:
33
A. What the terms were? Let’s see. That I pay up front five different, I think it’sfive different payments, and then after three months then the bill’s been wiped off,but the five different post-dated checks –
Q. Okay.
A. – for the fees.
TRIAL EX. 30 pg.203, ln.5-11. With respect to the retainer language specifically, Ms. Newman
testified to the following:
Q. Okay. And did you understand – what do you understand that that means?
A. That’s what I was reading to see. If it exceeds it, then we get a refund of what’sleft over.
Q. All right. And do you know how they’re charging that? Did you understand thatthis was $165 an hour for their post-petition services? Did you understand thisbefore right now?
A. No. I just – just briefly read over it.
Q. What were you told about your attorney fees, that they were just going to be acertain amount to cover your bankruptcy?
A. Yes.
Q. That’s kind of what you understood?
A. Uh-huh.
Q. Okay. Now, then, do you understand that now, that you might be entitled to arefund of some of those fees?
A. I didn’t know that.
Q. Is that what you understand in here?
A. Uh-huh, yes.
. . . .
34
Q. Okay. And tell me, did they tell you that you might be entitled to get a refund ofyour money?
A. No.
. . . .
Q. Okay. Did you understand that the work they did prior to your case being filedwould be charged at a certain amount and then the work that they did after your casewas filed would be charged at a certain amount?
A. No.
Q. Okay. So it was your understand that that fee was –
A. Everything.
TRIAL EX. 30 pg.208, ln.15-pg.209, ln.10; pg.210, ln.14-16; pg.213, ln.4-11. Ms. Newman testified
that, although her Engagement Contract with Clark & Washington stated that she was to pay $150.00
pre-petition, she paid no money up front and was advised that she could make payments on her case
through the post-dated checks. TRIAL EX. 30 pg.204, ln.22-pg.205, ln.5. She also testified that no
one from Clark & Washington discussed with her that any attorney’s fees for pre-petition services
not paid pre-petition would be waived and that she was not given any options for payment of her
attorney’s fees, including the use of third-party post-dated checks or pre-payment in full, other than
by using post-dated checks drawn against her personal account. TRIAL EX. 30 pg.211, ln.20-pg.213,
ln.19.
Ms. Newman received a discharge on March 31, 2010. Based upon the estimated time
records prepared by Clark & Washington and attached to Mr. Burroughs’s Affidavit, the firm
devoted a total of 6.8 hours to Ms. Newman’s bankruptcy case, of which 3.8 hours were attributed
35
to pre-petition work and 3.0 hours were attributed to post-petition work. COLL. TRIAL EX. 97. Of16
the post-petition hours, Mr. Burroughs testified at trial that .5 of an hour was actual attorney time. 17
Of the total $1,250.00 fee, one post-dated check of $220.00 was deposited by Clark & Washington
post-discharge, and the receipt entered into evidence reflects a balance due of $220.00. JT. STIPS.
¶ 6; COLL. TRIAL EX. 29.
Maurice Royston Soles and Lillie Louise Soles(Case No. 09-36796)
On October 22, 2009, Maurice Royston Soles and Lillie Louise Soles retained Clark &
Washington to represent them in the filing of their Chapter 7 bankruptcy case, executing in
association with this representation a Chapter 7 Attorney-Client Agreement for Routine Cases Under
11 U.S.C. Chapter 7, which outlined their duties as well as those of Clark & Washington. TRIAL EX.
41. The parties have stipulated that the Soleses’ Engagement Contract was the firm’s pre-Waldo
engagement agreement and not in compliance with that opinion. JT. STIPS. ¶ 7. As it relates to fees
for services related to the filing of and representation by Clark & Washington in their bankruptcy
case at issue in these contested matters, the Soleses’ Engagement Contract provides, inter alia, the
following:
The attachment to Mr. Burroughs’s Affidavit for Ms. Newman’s case reflects a total of 7.1 hours, but that16
figure also includes 0.3 of an hour for time attributable to these contested matters.
Ms. Newman paid $1,100.00 of her fee for post-petition services which, based upon the estimated time17
records, translates to an hourly rate of $366.67 for the 3.0 post-petition hours, including the 0.5 hour of actual attorney
time estimated by Mr. Burroughs to have been spent on her case.
36
It is hereby agreed by the undersigned “Attorney” and “Client” that Attorneyshall represent Client in a case under 11 U.S.C. Chapter 7. Client agrees to a totalattorney fee of $_______.[ ]18
Attorney’s fee includes fees for services to be rendered both pre- and post-petition. These serves are composed of separate components. The first component,the initial consultation, is free of charge. The second component, pre-petitionservices relating to the filing of the case, shall be paid prior to the filing of the case;however, if not paid prior to the filing of the petition, this portion of the fee shall bewaived and any claim for the same will be subject to the discharge entered in Client’scase. The third component, post-petition services relating to the prosecution of thecase, shall be paid post-petition in monthly installments via post-dated checks.
This fee does not include court filing costs; Client shall be responsible for allcourt and credit counseling costs associated with this case. Client agrees to pay anadditional fee of $100.00 plus court costs for each amendment filed, post-Petition,to include, list, or disclose any information which Client failed to provide to Attorneyprior to the filing of Client’s case. This agreement is predicated upon thecompleteness and accuracy of the relevant information provided to Attorney byClient. All fees paid by Client for the purpose of filing this Chapter 7 petition areNON-REFUNDABLE.
TRIAL EX. 41. The Engagement Contract also contains the following Acknowledgment executed by
the Soleses:
I further acknowledge and agree that this retainer contract contemplates payment forservices rendered pre-Petition as well as serves to be rendered post-Petition. Theinitial payment represents fees earned pre-Petition and the future payments are to beapplied as contemporaneous compensation for post-Petition services.
The amount is blank in the Engagement Contract entered into evidence as Trial Exhibit 41.18
37
TRIAL EX. 41. Notwithstanding that their Engagement Contract does not require the payment of19
any attorneys’ fee, the Soleses tendered to Clark & Washington $140.00 along with three post-dated
checks written on the Debtors’ personal bank account, each in the amount of $220.00, for deposit
into Clark & Washington’s operating account on January 3, 2010, February 3, 2010, and March 3,
2010, respectively. JT. STIPS. at ¶¶ 1-2; TRIAL EX. 42.
The Voluntary Petition commencing the Soleses’ Chapter 7 bankruptcy case was filed on
December 14, 2009. Filed contemporaneously with the Voluntary Petition was the Soleses’20
Statement of Financial Affairs, reflecting in response to question 9 concerning payments related to
debt counseling or bankruptcy that their $800.00 attorneys’ fee was paid by them on December 11,
Exhibit “A” attached to the Engagement Contract identifies the following as “Base Fee Services” included19
within the flat fee: (i) helping client obtain pre-filing credit briefing, pay advices, and tax returns/transcripts; (ii) initial
intake for Chapter 7 cases; (iii) attending the meeting of creditors and any adjourned meeting of creditors unless required
to reappear due to the Debtors’ non-appearance; (iv) pre-discharge financial counseling certification; (v) analysis of the
Debtors’ financial situation and advice in determining whether to file; and (vi) preparation and filing of the petition,
schedules, and statement of financial affairs. TRIAL EX. 41. Exhibit “B” to the Engagement Contract lists the “Non-Base
Fees Services/A La Carte Items” as follows, along with additional costs: (i) any contested matters including adversary
proceedings, objections to exemptions, determinations of dischargeability, and objections to discharge – $295.00 per
hour; (ii) reaffirmation agreements – $50.00 per agreement; (iii) redemptions – $350.00; (iv) amendments – $104.00;
(v) judicial lien avoidances – $150.00; (vi) defense of motions for relief from stay or other motions – $245.00 per hour;
(vii) more than 75 creditors – $50.00; (viii) miscellaneous letters – $50.00; (ix) emails/faxes to creditors – $15.00; (x)
motions to reopen the case – $100.00; (xi) credit reports – $20.00 per Debtor; and (xii) retrieving closed records – $0.25
per page. TRIAL EX. 41. The Engagement Contract also expressly excludes representation in adversary proceedings,
stating that
(19) ADVERSARY PROCEEDINGS: the parties specifically agree that the services contemplated
in this contract of employment DO NOT include representing Client, either as a Plaintiff or Defendant,
in any Adversary Proceeding filed in or in connection with this case. Should Attorney agree to
represent Client in an adversary proceeding, a different contract of employment shall be executed
between the parties under such terms and conditions as the parties deem mutually acceptable.
TRIAL EX. 41. The court addressed these so-called “carve-outs” listed on Exhibit “B” in Waldo and found them
“particularly troublesome when Clark & Washington and Mr. Crawford have charged the Debtors fees ranging from
$800.00 to $1,250.00, but now seek to exclude a majority of the services routinely performed post-petition from that flat
fee.” Waldo, 417 B.R. at 885.
See supra n.8. The Soleses executed their documents on October 22, 2009, but the Voluntary Petition is dated20
December 14, 2009, the date upon which the case was filed. See COLL. TRIAL EX. 38.
38
2009. COLL. TRIAL EX. 38. This information is not, however, reflected on the Compensation
Disclosure Statement executed by Mr. Burroughs on December 11, 2009 and filed on December 12,
2009, which disclosed total compensation of $800.00, with $140.00 paid and a balance due of
$660.00 to be paid “by debtor via post-dated checks in the amount of $220 each on 1/3/10, 2/3/10,
3/3/10.” COLL. TRIAL EX. 39. The Compensation Disclosure Statement also reflected the following
in paragraphs 6 and 7:
6. In return for the above-disclosed fee, I have agreed to render legal service for allaspects of the bankruptcy case, including:
a. [Other provisions as needed]no limitation except as set forth in paragraph 7 below.(i). Other provisions: This fee for pre-petition services is a flat feein the amount of $140.00. The fee for post-Petition services shall becapped at $660.00, and charged at a blended rate of $165 per hour. Debtor has provided counsel a retainer for the post-Petition servicesin the form of post-dated checks in the total amount of $660.00.
7. By agreement with the debtor(s), the above-disclosed fee does not include thefollowing service:
a. There will be an additional charge of $100 plus applicable court costs forthe preparation, filing and service of any amendment which is required to addor disclose any required information which should have been provided tocounsel prior to the filing of the case.b. The contract between the parties does not include representation inadversary proceedings.
COLL. TRIAL EX. 39. On February 2, 2010, Mr. Burroughs filed an amended Compensation
Disclosure Statement dated February 1, 2010, with the paragraph 6 language deleted in its entirety
and revising the paragraph 7 language to read:
7. By agreement with the debtor(s), the above-disclosed fee does not include thefollowing service:
39
a. These fees do not include certain costs associated with this case. Clientwill be responsible for all court costs, credit counseling costs, and the coststo obtain Client’s credit report. b. The contract between the parties does not include fees for representingClient in adversary proceedings. If Client is served with an adversaryproceeding complaint, Attorney shall take appropriate steps to protect andrepresent Client’s best interests until such time as either Client informsAttorney that Client does not wish to litigate the matter, Client affirmativelydeclines Attorney’s representation, Client obtains other counsel, or Attorneyis allowed to withdraw by the Court.
COLL. TRIAL EX. 39.
Mr. Burroughs also filed an amended Statement of Financial Affairs on behalf of the Soleses
on February 2, 2010, listing at question 9 the $140.00 payment received by Clark & Washington
from the Debtors on December 11, 2009, and the individual $220.00 checks received by Clark &
Washington from the Soleses dated January 3, 2010, February 3, 2010, and March 3, 2010, the dates
upon which their post-dated checks were to be deposited. TRIAL EX. 40. The amended Statement
of Financial Affairs contains the Debtors’ electronic signatures but were filed by Mr. Burroughs
without first obtaining the Soleses’ handwritten signatures. JT. STIPS. ¶ 4.
The U.S. Trustee took the 2004 examination of the Soleses on March 11, 2010. In response
to questions concerning their attorney’s fee arrangement with Clark & Washington, neither Mr. nor
Mrs. Soles understood their Engagement Contract to contain any allocation between pre-petition and
post-petition attorney’s fees, with Mrs. Soles stating that they didn’t owe any fees after they filed,
that they had “paid so much down in the beginning, and that’s it, and then the monthly payment.”
TRIAL EX. 43 pg.11, ln.18-pg.12, ln.23; pg.13, ln.7-15. Additionally, both Mr. and Mrs. Soles
40
testified that they were not informed that any debt they owed when they filed their petition was
dischargeable. TRIAL EX. 43 pg.12, ln.24-pg.13, ln.3; pg.15, ln.22-25.
The Soleses received a discharge on March 26, 2010. Based upon the estimated time records
prepared by Clark & Washington and attached to Mr. Burroughs’s Affidavit, the firm devoted a total
of 6.5 hours to the Soleses’ bankruptcy case, of which 3.5 hours were attributed to pre-petition work
and 3.0 hours were attributed to post-petition work. COLL. TRIAL EX. 97. Of the post-petition hours,
Mr. Burroughs testified at trial that .7 of an hour was actual attorney time. As reflected on the21
receipt entered into evidence, even though the Soleses’ Engagement Contract expressly states that
their attorneys’ fee was $0.00, each of the Soleses’ post-dated checks for the total $800.00 fee has
been deposited, leaving a balance due of $0.00. TRIAL EX. 42.
Cleofus Anthony Sanchez, Jr. and Brandy Lee Sanchez(Case No. 09-36802)
Cleofus Anthony Sanchez, Jr. and Brandy Lee Sanchez retained Clark & Washington to
represent them in the filing of their Chapter 7 bankruptcy case, executing in association with this
representation the initial post-Waldo Engagement Contract by Mr. Sanchez on December 2, 2009,
and by Ms. Sanchez on November 18, 2009. TRIAL EX. 35; see also TRIAL EX. 100. As to the22
The Soleses paid $660.00 of their fee for post-petition services which, based upon the estimated time records,21
translates to an hourly rate of $220.00 for the 3.0 post-petition hours, including the 0.7 hour of actual attorney time
estimated by Mr. Burroughs to have been spent on their case.
During her Rule 2004 examination, Ms. Sanchez testified that she met with Katherine Brown when she22
executed the Sanchezes’ Engagement Contract, that Ms. Brown was an attorney, and Ms. Brown gave her information
about bankruptcy. TRIAL EX. 37 pg.5, ln.14-pg.6, ln.5. At trial, however, Mr. Burroughs testified that Ms. Brown had
failed to pass the bar exam and was not, in fact, a licensed attorney in the State of Tennessee.
41
specific fees for services to be rendered in the filing of their bankruptcy case, the Sanchezes’
Engagement Contract contains the following terms:
Client agrees to pay the following fees:
I. Pre-Petition Fees and Services:
. . . .
b. The balance of the pre-Petition fee covers the remaining services required to assistClient in obtaining their required credit counseling certificate, gathering necessaryinformation and documents, advising Client regarding the legal issues involved inClient’s case, advising Client of the upcoming process, advising Client of theirresponsibilities as a debtor, and preparing and filing Client’s bankruptcy pleadings. The fee for these services is a flat fee of $150.00.
. . . .
II. Post-Petition Fees and Services:
a. Retainer. As a condition of representation in this case, Client agrees to payAttorney a retainer for services to be rendered post-Petition in Client’s case. Theretainer shall consist of post-dated checks in the total amount of $1,100.00.
TRIAL EX. 35. At that time and in accordance with the payment options offered, the Sanchezes
tendered to Clark & Washington, as payment of the $1,250.00 attorneys’ fee provided for by their
Engagement Contract, $150.00 along with five post-dated checks written on the Debtors’ personal
bank account, each in the amount of $220.00, for deposit into Clark & Washington’s operating
account on January 31, 2010, February 28, 2010, March 31, 2010, April 30, 2010, and May 31, 2010,
respectively. JT. STIPS. ¶¶ 1-2; TRIAL EX. 36; TRIAL EX. 37 pg.6, ln.16-pg.7, ln.14.
42
The Voluntary Petition commencing the Sanchezes’ Chapter 7 bankruptcy case was filed on
December 14, 2009. Filed contemporaneously with their Voluntary Petition was the Sanchezes’23
Statement of Financial Affairs, reflecting in response to question 9 concerning payments related to
debt counseling or bankruptcy that their $1,250.00 attorneys’ fee was paid by the Sanchezes on
December 12, 2009. COLL. TRIAL EX. 32. However, the information reflected on the Compensation
Disclosure Statement executed by Mr. Burroughs on December 12, 2009 and filed on December 14,
2009, disclosed total compensation of $1,250.00, with $150.00 paid and a balance due of $1,100.00
to be paid “by debtor via post-dated checks in the amount of $220 each on 1/31/10, 2/28/10, 3/31/10,
4/30/10, and 5/31/10.” COLL. TRIAL EX. 33. The Compensation Disclosure Statement also reflected
the following in paragraphs 6 and 7:
6. In return for the above-disclosed fee, I have agreed to render legal service for allaspects of the bankruptcy case, including:
a. [Other provisions as needed]no limitation except as set forth in paragraph 7 below.(i). Other provisions: This fee for pre-petition services is a flat feein the amount of $150.00. The fee for post-Petition services shall becapped at $1100.00, and charged at a blended rate of $165 per hour. Debtor has provided counsel a retainer for the post-Petition servicesin the form of post-dated checks in the total amount of $1100.00.
7. By agreement with the debtor(s), the above-disclosed fee does not include thefollowing service:
a. These fees do not include certain costs associated with this case. Client will be responsible for all court costs, credit counseling costs,and the costs to obtain Client’s credit report. b. The contract between the parties does not include fees for representingClient in adversary proceedings. If Client is served with an adversaryproceeding complaint, Attorney shall take appropriate steps to protect and
See supra n.8. The Sanchezes executed their documents on November 18 and December 12, 2009, but the23
Voluntary Petition is dated December 14, 2009, the date upon which their case was filed. See COLL. TRIAL EX. 32.
43
represent Client’s best interests until such time as either Client informsAttorney that Client does not wish to litigate the matter, Client affirmativelydeclines Attorney’s representation, Client obtains other counsel, or Attorneyis allowed to withdraw by the Court.
COLL. TRIAL EX. 33. On February 2, 2010, Mr. Burroughs filed an amended Compensation
Disclosure Statement dated February 1, 2010, with the paragraph 6 language deleted in its entirety.
COLL. TRIAL EX. 33.
Mr. Burroughs also filed an amended Statement of Financial Affairs on behalf of the
Sanchezes on March 4, 2010, listing at question 9 the $150.00 payment received by Clark &
Washington from the Debtors on December 12, 2009, and the individual $220.00 checks received
by Clark & Washington from the Sanchezes dated January 31, 2010, February 28, 2010, March 31,
2010, April 30, 2010, and May 31, 2010, the dates upon which their post-dated checks were to be
deposited. TRIAL EX. 34. The amended Statement of Financial Affairs contains the Debtors’
electronic signatures but was filed by Mr. Burroughs without first obtaining the Sanchezes’
handwritten signatures. JT. STIPS. ¶ 4.
The U.S. Trustee took the 2004 examination of the Sanchezes on March 11, 2010. In
response to questions concerning their attorney’s fee arrangement with Clark & Washington, Ms.
Sanchez testified as follows:
A. We were paying kind of like a retention fee of $150 or a retainer fee, and that wewere making payments for [the] rest of our bankruptcy fee.
Q. Did they quote you an amount that it was going to cost for your bankruptcy forthe attorney fees?
A. Yes. The total was $1250, I believe.
44
Q. Twelve fifty?
A. Yeah.
Q. Which is adding the $150 to $1150 –
A. Yes.
Q. – to $1100. So that would be $1250, and that’s what you understood was goingto be your attorney fee?
A. Yes.
. . . .
Q. Did you understand in the event that they did not spend a little over six hours oralmost seven hours of time on your case after it was filed that you could ask for arefund of the money?
A. No, I didn’t know.
Q. Did anyone discuss that with you before you signed this?
A. No.
Q. So you didn’t have any idea that the $1100 retainer fee was going to be billed outat $165 of actual time – an hour of actual time expended on your case?
A. No. I – I understood it to be $1250 was just the fee that we paid regardless ofhow much time was spent.
TRIAL EX. 37 pg.11, ln.2-19; pg.13, ln.24-pg.14, ln.13.
The Sanchezes received a discharge on April 6, 2010. Based upon the estimated time records
prepared by Clark & Washington and attached to Mr. Burroughs’s Affidavit, the firm devoted a total
of 6.8 hours to the Sanchezes’ bankruptcy case, of which 3.3 hours were attributed to pre-petition
45
work and 3.5 hours were attributed to post-petition work. COLL. TRIAL EX. 97. Of the post-petition24
hours, Mr. Burroughs testified at trial that 1.7 hours were actual attorney time, although in her Rule
2004 examination, Ms. Sanchez stated that the post-petition time spent speaking or meeting with
anyone from Clark & Washington was “[s]omewhere between 30 minutes and an hour.” TRIAL EX.25
37 pg.17, ln.19-20. Of the total $1,250.00 fee, two post-dated checks, each in the amount of
$220.00, were deposited by Clark & Washington post-discharge, and the receipt entered into
evidence reflects a balance due of $0.00. JT. STIPS. ¶ 6; TRIAL EX. 36.
William Bradley Dickerson and Cynthia Taylor Dickerson(Case No. 09-36875)
On December 11, 2009, William Bradley Dickerson and Cynthia Taylor Dickerson retained
Clark & Washington to represent them in the filing of their Chapter 7 bankruptcy case, executing
in association with this representation the second post-Waldo Engagement Contract. TRIAL EX. 15;
see also TRIAL EX. 101. As to the specific fees for services to be rendered in the filing of their
bankruptcy case, the Dickersons’ Engagement Contract contains the following terms:
Client agrees to pay the following fees:
I. Pre-Petition Fees and Services:
. . . .
b. The balance of the pre-Petition fee covers the remaining services required to assistClient in obtaining their required credit counseling certificate, gathering necessary
The attachment to Mr. Burroughs’s Affidavit for the Sanchezes’ case reflects a total of 6.9 hours, but that24
figure also includes 0.1 of an hour for time attributable to these contested matters.
The Sanchezes paid $1,100.00 of their fee for post-petition services which, based upon the estimated time25
records, translates to an hourly rate of $314.29 for the 3.5 post-petition hours, including the 1.7 hours of actual attorney
time estimated by Mr. Burroughs to have been spent on their case.
46
information and documents, advising Client regarding the legal issues involved inClient’s case, advising Client of the upcoming process, advising Client of theirresponsibilities as a debtor, and preparing and filing Client’s bankruptcy pleadings. The fee for these services is a flat fee of $150.00.
. . . .
II. Post-Petition Fees and Services:
a. Retainer. As a condition of representation in this case, Client agrees to payAttorney a retainer for services to be rendered post-Petition in Client’s case. Theretainer shall consist of post-dated checks in the total amount of $1,100.00.
TRIAL EX. 15. At that time and in accordance with the payment options offered, the Dickersons
tendered to Clark & Washington, as payment of the $1,250.00 attorneys’ fee provided for by their
Engagement Contract, $150.00 along with five post-dated checks written on the Debtors’ personal
bank account, each in the amount of $220.00, for deposit into Clark & Washington’s operating
account on January 15, 2010, February 15, 2010, March 15, 2010, April 15, 2010, and May 15, 2010,
respectively. JT. STIPS. ¶¶ 1-2; TRIAL EX. 16; TRIAL EX. 17 pg.189, ln.20-25.
The Voluntary Petition commencing the Dickersons’ Chapter 7 bankruptcy case was filed
on December 18, 2009. Filed contemporaneously with the Voluntary Petition was the Dickersons’26
Statement of Financial Affairs, reflecting in response to question 9 concerning payments related to
debt counseling or bankruptcy that their $1,250.00 attorneys’ fee was paid by them on December 16,
2009. COLL. TRIAL EX. 12. This information is not, however, reflected on the Compensation
Disclosure Statement executed by Mr. Burroughs on December 17, 2009 and filed on December 18,
2009, which disclosed total compensation of $1,250.00, with $150.00 paid and a balance due of
See supra n.8. The Dickersons executed their documents on December 11, 2009, but the Voluntary Petition26
is dated December 18, 2009, the date upon which their case was filed. See COLL. TRIAL EX. 12.
47
$1,100.00 to be paid “by debtor via post-dated checks in the amount of $220 each on 1/15/10,
2/15/10, 3/15/10, 4/15/10, 5/15/10.” COLL. TRIAL EX. 14. The Compensation Disclosure Statement
also reflected the following in paragraphs 6 and 7:
6. In return for the above-disclosed fee, I have agreed to render legal service for allaspects of the bankruptcy case, including:
a. [Other provisions as needed]no limitation except as set forth in paragraph 7 below.(i). Other provisions: This fee for pre-petition services is a flat feein the amount of $150.00. The fee for post-Petition services shall becapped at $1,100.00, and charged at a blended rate of $165 per hour. Debtor has provided counsel a retainer for the post-Petition servicesin the form of post-dated checks in the total amount of $1,100.00.
7. By agreement with the debtor(s), the above-disclosed fee does not include thefollowing service:
a. These fees do not include certain costs associated with this case. Clientwill be responsible for all court costs, credit counseling costs, and the coststo obtain Client’s credit report. b. The contract between the parties does not include fees for representingClient in adversary proceedings. If Client is served with an adversaryproceeding complaint, Attorney shall take appropriate steps to protect andrepresent Client’s best interests until such time as either Client informsAttorney that Client does not wish to litigate the matter, Client affirmativelydeclines Attorney’s representation, Client obtains other counsel, or Attorneyis allowed to withdraw by the Court.
COLL. TRIAL EX. 14. On February 2, 2010, Mr. Burroughs filed an amended Compensation
Disclosure Statement dated February 1, 2010, with the paragraph 6 language deleted in its entirety
and revising the paragraph 7 language to read:
7. By agreement with the debtor(s), the above-disclosed fee does not include thefollowing service:
a. These fees do not include certain costs associated with this case. Clientwill be responsible for all court costs, credit counseling costs, and the coststo obtain Client’s credit report. b. The contract between the parties does not include fees for representingClient in adversary proceedings. If Client is served with an adversary
48
proceeding complaint, Attorney shall take appropriate steps to protect andrepresent Client’s best interests until such time as either Client informsAttorney that Client does not wish to litigate the matter, Client affirmativelydeclines Attorney’s representation, Client obtains other counsel, or Attorneyis allowed to withdraw by the Court.
COLL. TRIAL EX. 14.
Mr. Burroughs also filed an amended Statement of Financial Affairs on behalf of the
Dickersons on February 2, 2010, listing the $150.00 payment received by Clark & Washington from
the Debtors on December 18, 2009, and the individual $220.00 checks received by Clark &
Washington from the Dickersons dated January 15, 2010, February 15, 2010, March 15, 2010,
April 15, 2010, and May 15, 2010, the dates upon which their post-dated checks were to be
deposited. TRIAL EX. 13. The amended Statement of Financial Affairs contains the Debtors’
electronic signatures but was filed by Mr. Burroughs without first obtaining the Dickersons’
handwritten signatures. JT. STIPS. ¶ 4.
The Dickersons attended their meeting of creditors on January 22, 2010, at which time the
attorney for the U.S. Trustee questioned them concerning their fee arrangement with Clark &
Washington, at which time Ms. Dickerson stated that she had thought the entire fee paid would cover
their whole bankruptcy. TRIAL EX. 17 pg.187, ln.17-pg.188, ln.10. When asked by the U.S. Trustee
about the dual nature of pre-petition and post-petition fees and services, the Dickersons testified as
follows:
Q. Okay. Now what do you think that means?
A. Well, it sounds like, if I gave them any money in – before the filing, that I couldhave put them in the filing and wiped that out. That’s what it sounds like. I don’tknow if that’s true or not.
49
Q. Okay. Now I want you to look down at the next paragraph, paragraph 2. It talksabout post-petition fees and services.
A. Uh-huh.
Q. And it talks about a retainer, and it shows that – it says that the retainer shallconsist of post-dated checks in the total amount of $1,100, is that correct?
. . . .
Q. – because it does have the numbers in there. And it says here that the retainer –
A. I do recall that, yes. I do recall that.
Q. Okay. Now, let’s look at this next paragraph. I want you to read it out loud forme.
A. This retainer shall be applied to the post-petition services to be rendered byattorney in client’s name. These services include, but are not limited to thoseservices listed in paragraph 8 below. The retainer is based upon a blended hourly rateof $165. The amount of post-petition fees should be capped at the time of theretainer listed above regardless of the amount of services expended in the excessthereof.
Q. Okay. Now, what do you think that means?
A. Well, it sounds to me like we agree on that amount to get the job done no matterwhat it takes.
Q. Okay. But that’s the amount. Do you understand what it means to have an hourlyrate?
A. Yeah.
Q. Okay. Now, tell me what – how do you think that –
A. Well, that’s like $175 per – $165 per hour, however many hours it takes.
Q. Okay. Now I want you to read this next paragraph to me.
. . . .
50
A. Okay. The parties contemplate that the value of the post-petition servicesrendered by attorney in this case shall meet or exceed the total amount of the quotedretainer. Nonetheless, client is entitled to request a final accounting of the feescharged by attorney in this case and thereafter receive a refund of any amount of theretainer paid in excess of the value of the post-petition services rendered.
Q. Okay. Have you – do you understand the implication of that?
A. That says that if it was a real quick and simple process and didn’t take a lot oftheir time, unless there were charges that they can show me they had to pay, I mightget some of that $1,100 back.
Q. Right. Did you understand that before you just read that now?
A. No, I can’t tell you that I did.
. . . .
Q. Okay. How about you, sir, did you read that?
A. [Mr. Dickerson] We read it together off the same page. . . . We skimmed throughit.
Q. Okay. Did you understand that?
A. I understand it now.
Q. Okay. But you didn’t understand it then. Did they explain – sit down and explainthat that $1,100 was subject to an hourly rate and only – they would only billaccording to how much time they spent on your case?
A. [Mr. Dickerson] We were told that it was going to cost this amount, and that’swhy we did the post-dated checks. And we were supposed to read that. I probablyskimmed through it and didn’t fully understand it.
TRIAL EX. 17 pg.191, ln.10-pg.194, ln.23. With respect to paying their attorney’s fees, Mr.
Dickerson testified that they had been given three options: to borrow the money from family to pay
the attorney’s fees, to pay in advance, or to provide post-dated checks, but that they had not been
51
advised that any money borrowed from family members would have been dischargeable. TRIAL EX.
17 pg.196, ln.21-pg.198, ln.25.
The Dickersons received a discharge on March 30, 2010. Based upon the estimated time
records prepared by Clark & Washington and attached to Mr. Burroughs’s Affidavit, the firm
devoted a total of 7.0 hours to the Dickersons’ bankruptcy case, of which 3.4 hours were attributed
to pre-petition work and 3.6 hours were attributed to post-petition work. COLL. TRIAL EX. 97. Of27
the post-petition hours, Mr. Burroughs testified at trial that 1.8 hours were actual attorney time. 28
Of the total $1,250.00 fee, one post-dated check in the amount of $220.00 was deposited by Clark
& Washington post-discharge, and the receipt entered into evidence reflects a balance due of $0.00.
JT. STIPS. ¶ 6; TRIAL EX. 16.
Mary Louise Zick(Case No. 09-36938)
On December 8, 2009, Mary Louise Zick retained Clark & Washington to represent her in
the filing of her Chapter 7 bankruptcy case, executing in association with this representation the
second post-Waldo Engagement Contract. TRIAL EX. 22; see also TRIAL EX. 101. As to the specific
fees for services to be rendered in the filing of her bankruptcy case, Ms. Zick’s Engagement Contract
contains the following terms:
Client agrees to pay the following fees:
The attachment to Mr. Burroughs’s Affidavit for the Dickersons’ case reflects a total of 7.3 hours, but that27
figure also includes 0.3 of an hour for time attributable to these contested matters.
The Dickersons paid $1,100.00 of their fee for post-petition services which, based upon the estimated time28
records, translates to an hourly rate of $305.56 for the 3.6 post-petition hours, including the 1.8 hours of actual attorney
time estimated by Mr. Burroughs to have been spent on their case.
52
I. Pre-Petition Fees and Services:
. . . .
b. The balance of the pre-Petition fee covers the remaining services required to assistClient in obtaining their required credit counseling certificate, gathering necessaryinformation and documents, advising Client regarding the legal issues involved inClient’s case, advising Client of the upcoming process, advising Client of theirresponsibilities as a debtor, and preparing and filing Client’s bankruptcy pleadings. The fee for these services is a flat fee of $150.00.
. . . .
II. Post-Petition Fees and Services:
a. Retainer. As a condition of representation in this case, Client agrees to payAttorney a retainer for services to be rendered post-Petition in Client’s case. Theretainer shall consist of post-dated checks in the total amount of $850.00.
COLL. TRIAL EX. 22. At that time and in accordance with the payment options offered, Ms. Zick
tendered to Clark & Washington, as payment of the $1,000.00 attorneys’ fee provided for by her
Engagement Contract, $150.00 along with five post-dated checks written on the Debtor’s personal
bank account, each in the amount of $170.00, for deposit into Clark & Washington’s operating
account on January 5, 2010, February 5, 2010, March 5, 2010, April 5, 2010, and May 5, 2010,
respectively. JT. STIPS. ¶¶ 1-2; TRIAL EX. 23.
The Voluntary Petition commencing Ms. Zick’s Chapter 7 bankruptcy case was filed on
December 23, 2009. COLL. TRIAL EX. 19. Filed contemporaneously with the Voluntary Petition29
was Ms. Zick’s Statement of Financial Affairs, reflecting in response to question 9 concerning
payments related to debt counseling or bankruptcy that her $1,000.00 attorneys’ fee was paid by Ms.
See supra n.8. Ms. Zick executed her documents on December 8, 2009, but the Voluntary Petition is dated29
December 23, 2009, the date upon which her case was filed.
53
Zick on December 16, 2009. COLL. TRIAL EX. 19. However, the information reflected on the
Compensation Disclosure Statement executed by Mr. Burroughs on December 17, 2009 and filed
on December 23, 2009, disclosed total compensation of $1,000.00, with $150.00 paid and a balance
due of $850.00 to be paid “by debtor via post-dated checks in the amount of $170 each on 1/5/10,
2/5/10, 3/5/10, 4/5/10, 5/5/10.” COLL. TRIAL EX. 20. The Compensation Disclosure Statement also
reflected the following in paragraphs 6 and 7:
6. In return for the above-disclosed fee, I have agreed to render legal service for allaspects of the bankruptcy case, including:
a. [Other provisions as needed]no limitation except as set forth in paragraph 7 below.(i). Other provisions: This fee for pre-petition services is a flat feein the amount of $150.00. The fee for post-Petition services shall becapped at $850.00, and charged at a blended rate of $165 per hour. Debtor has provided counsel a retainer for the post-Petition servicesin the form of post-dated checks in the total amount of $850.00.
7. By agreement with the debtor(s), the above-disclosed fee does not include thefollowing service:
a. These fees do not include certain costs associated with this case. Clientwill be responsible for all court costs, credit counseling costs, and the coststo obtain Client’s credit report. b. The contract between the parties does not include fees for representingClient in adversary proceedings. If Client is served with an adversaryproceeding complaint, Attorney shall take appropriate steps to protect andrepresent Client’s best interests until such time as either Client informsAttorney that Client does not wish to litigate the matter, Client affirmativelydeclines Attorney’s representation, Client obtains other counsel, or Attorneyis allowed to withdraw by the Court.
COLL. TRIAL EX. 20. On February 3, 2010, Mr. Burroughs filed an amended Compensation
Disclosure Statement dated February 1, 2010, with the paragraph 6 language deleted in its entirety.
COLL. TRIAL EX. 20.
54
Mr. Burroughs also filed an amended Statement of Financial Affairs on behalf of Ms. Zick
on February 3, 2010, listing at question 9 the $150.00 payment received by Clark & Washington
from the Debtor on December 17, 2009, and the individual $170.00 checks received by Clark &
Washington from Ms. Zick dated January 5, 2010, February 5, 2010, March 5, 2010, April 5, 2010,
and May 5, 2010, the dates upon which her post-dated checks were to be deposited. TRIAL EX. 21.
The amended Statement of Financial Affairs contains the Debtor’s electronic signature but was filed
by Mr. Burroughs without first obtaining Ms. Zick’s handwritten signature. JT. STIPS. ¶ 4.
The U.S. Trustee took the 2004 examination of Ms. Zick on March 11, 2010. In response
to questions concerning the nature of her fee arrangement with Clark & Washington, Ms. Zick
testified to the following:
Q. Ms. Zick, when you signed this agreement with Clark & Washington, did youread it?
A. Pretty well, pretty much, yeah, because I took it home. I have one here.
Q. Okay. Can you tell me what your understanding was about how the paymentswere going to be applied?
A. You mean the five post-dated checks?
Q. The pre-payments and the post-dated checks, yes.
A. They was – I don’t understand. They made the checks out, and then before thedate that it was due you – it went through the bank or you could go down and replacethe check with cash.
. . . .
Q. Okay. Now then, when you talked to them about how much the bankruptcywould cost, how much did they tell you? Just the attorney fees. Not the filing –
A. Oh, just the attorney fees?
55
Q. Yes.
A. I think it was – I had it marked down one thousand something.
Q. You think it was about a thousand dollars?
A. Yeah.
Q. All right. I think that’s probably what these numbers add up to be. Now, did theytell you that they were going to charge you by the hour for all the work they did afterthe bankruptcy was filed?
A. I don’t think so.
Q. There’s a statement in your contract that says that “this retainer shall be appliedto the post-petition services to be rendered by attorney in client’s case. Theseservices include, but are not limited to, those services listed in paragraph b below. The retainer is based upon a” – let’s see.
A. Blended.
Q. – “blended hourly rate of $165.” Did you understand that you were going to bebilled on an hourly rate against the $850 for post-petition services?
A. Probably not, but you know.
Q. Did you think that the cost of the bankruptcy was just a thousand dollars?
A. Whatever – whatever – yeah, whatever I paid.
. . . .
Q. Okay. I understand. Now then, did they also tell you, did you understand, thatyou might get some of the money back if they didn’t spend that much time on yourcase after it was filed?
A. Yeah.
Q. And how did they explain that to you?
56
A. Like at the end and when everything is done, then they would send you a letterand you could – if you didn’t want to retain it, you didn’t have to. Something – likethe last payment or something.
Q. Okay. So they would tell you how much they had really charged you for thebankruptcy?
A. Yeah.
Q. So it was your understand that you could get some money back at the end of thebankruptcy?
A. But I wouldn’t – I wouldn’t do that. I just pay the whole – whatever I wascharged.
TRIAL EX. 25 pg.9, ln.22-pg.10, ln.10; pg.12, ln.2-pg.14, ln.17.
Ms. Zick received a discharge on April 13, 2010. Based upon the estimated time records
prepared by Clark & Washington and attached to Mr. Burroughs’s Affidavit, the firm devoted a total
of 6.0 hours to Ms. Zick’s bankruptcy case, of which 3.3 hours were attributed to pre-petition work
and 2.7 hours were attributed to post-petition work. COLL. TRIAL EX. 97. Of the post-petition30
hours, Mr. Burroughs testified at trial that .7 of an hour was actual attorney time. Of the total31
$1,000.00 fee, one post-dated check in the amount of $170.00 was replaced by Ms. Zick with cash
and deposited by Clark & Washington post-discharge, and the receipt entered into evidence reflects
a balance due of $0.00. JT. STIPS. ¶ 6; TRIAL EX. 23; TRIAL EX. 25 pg.10, ln.7-10.
The attachment to Mr. Burroughs’s Affidavit for Ms. Zick’s case reflects a total of 6.3 hours, but that figure30
also includes 0.3 of an hour for time attributable to these contested matters.
Ms. Zick paid $850.00 of her fee for post-petition services which, based upon the estimated time records,31
translates to an hourly rate of $314.81 for the 2.7 post-petition hours, including the 0.7 hour of actual attorney time
estimated by Mr. Burroughs to have been spent on her case.
57
John Douglas Cox(Case No. 10-30169)
On December 9, 2009, John Douglas Cox retained Clark & Washington to represent him in
the filing of his Chapter 7 bankruptcy case, executing in association with this representation the
second post-Waldo Engagement Contract. TRIAL EX. 67; see also TRIAL EX. 101. As to the specific
fees for services to be rendered in the filing of his bankruptcy case, Mr. Cox’s Engagement Contract
contains the following terms:
Client agrees to pay the following fees:
I. Pre-Petition Fees and Services:
. . . .
b. The balance of the pre-Petition fee covers the remaining services required to assistClient in obtaining their required credit counseling certificate, gathering necessaryinformation and documents, advising Client regarding the legal issues involved inClient’s case, advising Client of the upcoming process, advising Client of theirresponsibilities as a debtor, and preparing and filing Client’s bankruptcy pleadings. The fee for these services is a flat fee of $150.00.
. . . .
II. Post-Petition Fees and Services:
a. Retainer. As a condition of representation in this case, Client agrees to payAttorney a retainer for services to be rendered post-Petition in Client’s case. Theretainer shall consist of post-dated checks in the total amount of $1,100.00.
TRIAL EX. 67. At that time and in accordance with the payment options offered, Mr. Cox tendered
to Clark & Washington, as payment of the $1,250.00 attorneys’ fee provided for by his Engagement
Contract, five post-dated checks from Beverle Bledsoe Carpenter, each in the amount of $250.00,
for deposit into Clark & Washington’s operating account on February 1, 2010, March 1, 2010,
58
April 1, 2010, May 1, 2010, and June 1, 2010, respectively. JT. STIPS. ¶¶ 1-2; TRIAL EX. 68. Clark32
& Washington did not specifically instruct Mr. Cox to incur debt to pay his fees but advised that he
could finance the fee for a period of time after the case was filed through post-dated checks. JT.
STIPS. ¶ 3.
The Voluntary Petition commencing Mr. Cox’s Chapter 7 bankruptcy case was filed on
January 18, 2010. Filed contemporaneously with the Voluntary Petition was Mr. Cox’s Statement33
of Financial Affairs, reflecting in response to question 9 concerning payments related to debt
counseling or bankruptcy that his $1,250.00 attorneys’ fee was paid by Beverle Bledsoe on
January 4, 2010. COLL. TRIAL EX. 64. This information is not, however, reflected on the
Compensation Disclosure Statement executed by Mr. Burroughs on January 4, 2010, and filed on
January 18, 2010, which disclosed total compensation of $1,250.00, with $0.00 paid and a balance
due of $1,250.00 to be paid “by third party, Beverle Bledsoe, via post-dated checks in the amount
of $250 each on 2/1/10, 3/1/10, 4/1/10, 5/1/10, & 6/1/10.” COLL. TRIAL EX. 65. The Compensation
Disclosure Statement also reflected the following in paragraphs 6 and 7:
6. In return for the above-disclosed fee, I have agreed to render legal service for allaspects of the bankruptcy case, including:
a. [Other provisions as needed]no limitation except as set forth in paragraph 7 below.(i). Other provisions: This fee for pre-petition services is a flat feein the amount of $150.00. The fee for post-Petition services shall becapped at $1100.00, and charged at a blended rate of $165 per hour.
At his meeting of creditors, Mr. Cox identified the third party payor as “Beverle Bledsoe Carpenter.” TRIAL32
EX. 69 pg.222, ln.10-12.
See supra n.8. Mr. Cox executed his documents on December 9, 2009, but the Voluntary Petition is dated33
January 18, 2010, the date upon which his case was filed. See COLL. TRIAL EX. 64.
59
Debtor has provided counsel a retainer for the post-Petition servicesin the form of post-dated checks in the total amount of $ n/a.
7. By agreement with the debtor(s), the above-disclosed fee does not include thefollowing service:
a. These fees do not include certain costs associated with this case. Clientwill be responsible for all court costs, credit counseling costs, and the coststo obtain Client’s credit report. b. The contract between the parties does not include fees for representingClient in adversary proceedings. If Client is served with an adversaryproceeding complaint, Attorney shall take appropriate steps to protect andrepresent Client’s best interests until such time as either Client informsAttorney that Client does not wish to litigate the matter, Client affirmativelydeclines Attorney’s representation, Client obtains other counsel, or Attorneyis allowed to withdraw by the Court.
COLL. TRIAL EX. 65. On February 1, 2010, Mr. Burroughs filed an amended Compensation
Disclosure Statement dated January 29, 2010, with the paragraph 6 language deleted in its entirety.
COLL. TRIAL EX. 65.
Mr. Burroughs also filed an amended Statement of Financial Affairs on behalf of Mr. Cox
on February 3, 2010, listing at question 9 the individual $250.00 checks tendered to Clark &
Washington by Beverle Bledsoe dated February 1, 2010, March 1, 2010, April 1, 2010, May 1, 2010,
and June 1, 2010, the dates upon which the post-dated checks were to be deposited. TRIAL EX. 66.
The amended Statement of Financial Affairs contains the Debtor’s electronic signature but was filed
by Mr. Burroughs without first obtaining Mr. Cox’s handwritten signature. JT. STIPS. ¶ 4.
Mr. Cox attended his meeting of creditors on February 23, 2010, at which time the attorney
for the U.S. Trustee questioned him concerning his fee arrangement with Clark & Washington. In
response to the U.S. Trustee’s questions as to the nature of his fees, Mr. Cox answered as follows:
60
Q. When you met with Clark & Washington, did you understand that there wasgoing to be a flat fee charged for your bankruptcy?
A. I did, yes.
Q. And that’s what your understanding was.
A. Right, yes.
Q. Even though this is the contract you signed which states otherwise.
A. Right.
Q. It was your understanding that you –
A. Flat rate.
Q. – would pay a flat rate.
A. Exactly.
Q. Okay. Did anybody – did anybody at their office, any of the attorneys orparalegals or anyone sit down and discuss this contract with you and explain theterms and the billing of $165 an hour –
A. No. TRIAL. EX. 69 pg.228, ln.24-pg.229, ln.16. He also testified that Ms. Carpenter, his girlfriend,
provided him with the post-dated checks at his request after he was advised by Clark & Washington
that he needed them but that it was never intended that Ms. Carpenter would pay for his bankruptcy
case. TRIAL EX. 69 pg.223, ln.13-22; pg.230, ln.18-pg.231, ln.9. With respect to his options, Mr.
Cox testified that he was not given any options – including payment of the attorney’s fees in full up
front – other than payment through third-party post-dated checks. TRIAL. EX. 69 pg.230, ln.5-17.
Additionally, when asked how much time he had spent since the time his case was filed talking with
61
anyone from Clark & Washington, Mr. Cox answered “[t]hree, maybe four minutes.” TRIAL EX. 69
pg.228, ln.7-17.
Mr. Cox received a discharge on July 27, 2010. Based upon the estimated time records
prepared by Clark & Washington and attached to Mr. Burroughs’s Affidavit, the firm devoted a total
of 6.6 hours to Mr. Cox’s bankruptcy case, of which 3.5 hours were attributed to pre-petition work
and 3.1 hours were attributed to post-petition work. COLL. TRIAL EX. 97. Of the post-petition hours,
Mr. Burroughs testified at trial that .9 of an hour was actual attorney time. Of the total $1,250.0034
fee received post-petition, the receipt entered into evidence reflects a balance due of $0.00. TRIAL
EX. 68.
Charles Allen Hoffman(Case No. 10-30181)
On December 15, 2009, Charles Allen Hoffman retained Clark & Washington to represent
him in the filing of his Chapter 7 bankruptcy case, executing in association with this representation
the second post-Waldo Engagement Contract. COLL. TRIAL EX. 51; see also TRIAL EX. 101. As to
the specific fees for services to be rendered in the filing of his bankruptcy case, Mr. Hoffman’s
Engagement Contract contains the following terms:
Client agrees to pay the following fees:
I. Pre-Petition Fees and Services:
. . . .
Mr. Cox paid the entire $1,250.00 fee for post-petition services which, based upon the estimated time records,34
translates to an hourly rate of $403.23 for the 3.1 post-petition hours, including the 0.9 of an hour of actual attorney time
estimated by Mr. Burroughs to have been spent on his case.
62
b. The balance of the pre-Petition fee covers the remaining services required to assistClient in obtaining their required credit counseling certificate, gathering necessaryinformation and documents, advising Client regarding the legal issues involved inClient’s case, advising Client of the upcoming process, advising Client of theirresponsibilities as a debtor, and preparing and filing Client’s bankruptcy pleadings. The fee for these services is a flat fee of $150.00.
. . . .
II. Post-Petition Fees and Services:
a. Retainer. As a condition of representation in this case, Client agrees to payAttorney a retainer for services to be rendered post-Petition in Client’s case. Theretainer shall consist of post-dated checks in the total amount of $500.00.
5 @ 100.00[ ]35
COLL. TRIAL EX. 51. At that time and in accordance with the payment options offered, Mr. Hoffman
tendered to Clark & Washington, as payment of the $650.00 attorneys’ fee provided for by his
Engagement Contract, $150.00 along with five post-dated checks from his father, Carl Hoffman,36
in the amount of $100.00 for deposit into Clark & Washington’s operating account on March 1,
2010, April 1, 2010, May 1, 2010, June 1, 2010, and July 1, 2010, respectively. JT. STIPS. ¶¶ 1-2;
TRIAL EX. 52. Clark & Washington did not specifically instruct Mr. Hoffman to incur debt to pay
his fees but advised that he could finance the fee for a period of time after the case was filed through
post-dated checks. JT. STIPS. ¶ 3.
These figures are handwritten on Mr. Hoffman’s contract.35
All of the documents filed by Clark & Washington with the court state that Mr. Hoffman’s fees were paid by36
“Karla Hoffman;” however, Mr. Hoffman testified at his meeting of creditors that the post-dated checks, in fact, came
from his father, Carl Hoffman. COLL. TRIAL EX. 51 pg.5, ln.23-pg.6, ln.4.
63
The Voluntary Petition commencing Mr. Hoffman’s Chapter 7 bankruptcy case was filed on
January 18, 2010. Filed contemporaneously with the Voluntary Petition was Mr. Hoffman’s37
Statement of Financial Affairs, reflecting in response to question 9 concerning payments related to
debt counseling or bankruptcy that his $650.00 attorneys’ fee was paid by Mr. Hoffman on
January 15, 2010. COLL. TRIAL EX. 48. This information is not, however, reflected on the
Compensation Disclosure Statement executed and filed by Mr. Burroughs on January 18, 2010,
which disclosed total compensation of $650.00, with $150.00 paid and a balance due of $500.00 to
be paid “by third party, Karla Hoffman, via post-dated checks in the amount of $100 each on 3/1/10,
4/1/10, 5/1/10, 6/1/10, 7/1/10.” COLL. TRIAL EX. 49. The Compensation Disclosure Statement also
reflected the following in paragraphs 6 and 7:
6. In return for the above-disclosed fee, I have agreed to render legal service for allaspects of the bankruptcy case, including:
a. [Other provisions as needed]no limitation except as set forth in paragraph 7 below.(i). Other provisions: This fee for pre-petition services is a flat feein the amount of $150.00. The fee for post-Petition services shall becapped at $500.00, and charged at a blended rate of $165 per hour. Debtor has provided counsel a retainer for the post-Petition servicesin the form of post-dated checks in the total amount of $ n/a.
7. By agreement with the debtor(s), the above-disclosed fee does not include thefollowing service:
a. These fees do not include certain costs associated with this case. Clientwill be responsible for all court costs, credit counseling costs, and the coststo obtain Client’s credit report. b. The contract between the parties does not include fees for representingClient in adversary proceedings. If Client is served with an adversaryproceeding complaint, Attorney shall take appropriate steps to protect andrepresent Client’s best interests until such time as either Client informs
See supra n.8. Mr. Hoffman executed his documents on December 15, 2009, but the Voluntary Petition is37
dated January 18, 2010, the date upon which his case was filed. See COLL. TRIAL EX. 48.
64
Attorney that Client does not wish to litigate the matter, Client affirmativelydeclines Attorney’s representation, Client obtains other counsel, or Attorneyis allowed to withdraw by the Court.
COLL. TRIAL EX. 49. On February 1, 2010, Mr. Burroughs filed an amended Compensation
Disclosure Statement dated January 29, 2010, with the paragraph 6 language deleted in its entirety.
COLL. TRIAL EX. 49.
Mr. Burroughs also filed an amended Statement of Financial Affairs on Mr. Hoffman’s
behalf on February 3, 2010, listing at question 9 the individual $100.00 checks tendered to Clark &
Washington by “Karla Hoffman” dated March 1, 2010, and $150.00 on April 1, 2010, May 1, 2010,
June 1, 2010, and July 1, 2010, the dates upon which the post-dated checks were to be deposited.
TRIAL EX. 50. The amended Statement of Financial Affairs contains the Debtor’s electronic
signature but was filed by Mr. Burroughs without first obtaining Mr. Hoffman’s original signature.
JT. STIPS. ¶ 4.
Mr. Hoffman attended his meeting of creditors on February 23, 2010, at which time the
attorney for the U.S. Trustee questioned him concerning his fee arrangement with Clark &
Washington as follows:
Q. Okay. Did you understand that the fees for these – the thousand dollars[ ] that38
you paid was partly for work that they did before the bankruptcy was filed and partlyfor work that they did after the bankruptcy was filed?
A. Yeah, the way I understood it.
Q. Tell me about what you understood.
The total attorney fee paid by Mr. Hoffman was $650.00; however, he also paid the $299.00 filing fee and38
the costs for obtaining his pre-petition credit counseling briefing and post-petition financial management course, which
totals approximately $1,000.00 for the entire amount paid to Clark & Washington.
65
A. The money was to take care of this bankruptcy mess I’m in.
Q. Did you think the thousand dollars was to pay all of it?
A. Yeah.
Q. To take care of everything? Okay. Did anybody ever tell you that – that if – ifthe time they spent on your bankruptcy didn’t amount to a thousand dollars worth ofwork that you might get some money back?
A. No. I didn’t know nothing about that.
COLL. TRIAL EX. 51 pg.8, ln.25-pg.9, ln.17. With respect as to why he paid his fees with third-party
post-dated checks, Mr. Hoffman stated that he was unemployed and could not pay the attorneys’ fees
without assistance from his father. COLL. TRIAL EX. 51 pg.6, ln.5-23.
Mr. Hoffman received a discharge on May 7, 2010. Based upon the estimated time records
prepared by Clark & Washington and attached to Mr. Burroughs’s Affidavit, the firm devoted a total
of 5.6 hours to Mr. Hoffman’s bankruptcy case, of which 3.3 hours were attributed to pre-petition
work and 2.3 hours were attributed to post-petition work. COLL. TRIAL EX. 97. Of the post-petition39
hours, Mr. Burroughs testified at trial that .8 of an hour was actual attorney time. Of the total40
$1,250.00 fee, two post-dated checks, each in the amount of $100.00, was deposited by Clark &
Washington post-discharge, and the receipt entered into evidence reflects a balance due of $0.00.
JT. STIPS. ¶ 6; TRIAL EX. 52.
The attachment to Mr. Burroughs’s Affidavit for Mr. Hoffman’s case reflects a total of 5.8 hours, but that39
figure also includes 0.2 of an hour for collecting and receipting attorney fees.
Mr. Hoffman paid $500.00 of his fee for post-petition services which, based upon the estimated time records,40
translates to an hourly rate of $217.39 for the 2.3 post-petition hours, including the 0.8 hour of actual attorney time
estimated by Mr. Burroughs to have been spent on his case.
66
Carl Dean Luttrell, Jr. and Sherry Renee Luttrell(Case No. 10-30275)
On December 5, 2009, Carl Dean Luttrell, Jr. and Sherry Renee Luttrell retained Clark &
Washington to represent them in the filing of their Chapter 7 bankruptcy case, executing in
association with this representation the second post-Waldo Engagement Contract. TRIAL EX. 61; see
also TRIAL EX. 101. As to the specific fees for services to be rendered in the filing of their
bankruptcy case, the Luttrells’ Engagement Contract contains the following terms:
Client agrees to pay the following fees:
I. Pre-Petition Fees and Services:
. . . .
b. The balance of the pre-Petition fee covers the remaining services required to assistClient in obtaining their required credit counseling certificate, gathering necessaryinformation and documents, advising Client regarding the legal issues involved inClient’s case, advising Client of the upcoming process, advising Client of theirresponsibilities as a debtor, and preparing and filing Client’s bankruptcy pleadings. The fee for these services is a flat fee of $150.00.
. . . . II. Post-Petition Fees and Services:
a. Retainer. As a condition of representation in this case, Client agrees to payAttorney a retainer for services to be rendered post-Petition in Client’s case. Theretainer shall consist of post-dated checks in the total amount of $1,100.00.
TRIAL EX. 61. At that time and in accordance with the payment options offered, the Luttrells
tendered to Clark & Washington, as payment of the $1,250.00 attorneys’ fee provided for by their
Engagement Contract, $150.00 along with six post-dated checks from Sheila Coffey, each in the
amount of $157.14, for deposit into Clark & Washington’s operating account on February 18, 2010,
March 18, 2010, April 18, 2010, May 18, 2010, June 18, 2010, and July 18, 2010, respectively, and
67
one post-dated check in the amount of $157.16 to be deposited on August 18, 2010. JT. STIPS.
¶¶ 1- 2; TRIAL EX. 62. Clark & Washington did not specifically instruct the Luttrells to incur debt
to pay their fees but advised that they could finance the fee for a period of time after the case was
filed through post-dated checks. JT. STIPS. ¶ 3.
The Voluntary Petition commencing the Luttrells’ Chapter 7 bankruptcy case was filed on
January 25, 2010. COLL. TRIAL EX. 58. Filed contemporaneously with the Voluntary Petition was41
the Luttrells’ Statement of Financial Affairs, reflecting in response to question 9 concerning
payments related to debt counseling or bankruptcy that their $1,250.00 attorneys’ fee was paid by
the Luttrells on January 14, 2010. COLL. TRIAL EX. 58. This information is not, however, reflected
on the Compensation Disclosure Statement executed and filed by Mr. Burroughs on January 25,
2010, which disclosed total compensation of $1,250.00, with $150.00 paid and a balance due of
$1,100.00 to be paid “by third party, Sheila Coffey, via post-dated checks in the amount of $157.14
each on 2/18/10, 3/18/10, 4/18/10, 5/18/10, 6/18/10, 7/18/10, and $157.16 on 8/18/10.” COLL. TRIAL
EX. 59. The Compensation Disclosure Statement also reflected the following in paragraphs 6 and
7:
6. In return for the above-disclosed fee, I have agreed to render legal service for allaspects of the bankruptcy case, including:
a. [Other provisions as needed]no limitation except as set forth in paragraph 7 below.(i). Other provisions: This fee for pre-petition services is a flat feein the amount of $150.00. The fee for post-Petition services shall becapped at $1,100.00, and charged at a blended rate of $165 per hour.
See supra n.8. The Luttrells executed their documents on December 5, 2009, but the Voluntary Petition is41
dated January 25, 2010, the date upon which their case was filed. See COLL. TRIAL EX. 58.
68
Debtor has provided counsel a retainer for the post-Petition servicesin the form of post-dated checks in the total amount of $ n/a.
7. By agreement with the debtor(s), the above-disclosed fee does not include thefollowing service:
a. These fees do not include certain costs associated with this case. Clientwill be responsible for all court costs, credit counseling costs, and the coststo obtain Client’s credit report. b. The contract between the parties does not include fees for representingClient in adversary proceedings. If Client is served with an adversaryproceeding complaint, Attorney shall take appropriate steps to protect andrepresent Client’s best interests until such time as either Client informsAttorney that Client does not wish to litigate the matter, Client affirmativelydeclines Attorney’s representation, Client obtains other counsel, or Attorneyis allowed to withdraw by the Court.
COLL. TRIAL EX. 59. On February 1, 2010, Mr. Burroughs filed an amended Compensation
Disclosure Statement dated January 29, 2010, with the paragraph 6 language deleted in its entirety.
COLL. TRIAL EX. 59.
Mr. Burroughs also filed an amended Statement of Financial Affairs on behalf of the Luttrells
on February 3, 2010, listing at question 9 the $150.00 paid to Clark & Washington on January 14,
2010, the six individual checks to be paid to Clark & Washington from Sheila Coffey of $157.14 on
February 18, 2010, March 18, 2010, April 18, 2010, May 18, 2010, June 18, 2010, and July 18, 2010,
and the $157.16 check to be paid on August 18, 2010, the dates upon which the post-dated checks
were to be deposited. TRIAL EX. 60. The amended Statement of Financial Affairs contains the
Debtors’ electronic signatures but was filed by Mr. Burroughs without first obtaining the Luttrells’
handwritten signatures. JT. STIPS. ¶ 4.
The Luttrells attended their meeting of creditors on March 2, 2010, at which time the attorney
for the U.S. Trustee questioned them concerning their fee arrangement with Clark & Washington.
69
In response to the U.S. Trustee’s request that they explain, in their own words, how they were to pay
their attorneys’ fees, the Luttrells testified as follows:
A. [Mr. Luttrell] We paid them so much up front – do you remember exactly? Wasit $500?
A. [Ms. Luttrell] Yes, it was $500.
A. [Mr. Luttrell] $300 and something of it was for the filing, I think.
Q. The filing fee?
A. [Mr. Luttrell] Uh-huh. And then $150 was for them. And then we hadarrangements to pay by check, third party check –
A. [Ms. Luttrell] Third party.
A. [Mr. Luttrell] – seven –
A. [Ms. Luttrell] Post-dated.
A. [Mr. Luttrell] – post-dated checks.
Q. And what were the amount of those third-party checks?
A. [Ms. Luttrell] $157.
Q. $157 for seven months?
A. [Ms. Luttrell] Yes.
A. [Mr. Luttrell] The total came up to like $1,500, I think. Somewhere in thatneighborhood, with what we paid down and the checks.
Q. When you made this payment arrangement, was it ever explained to you howmuch was for the work that was done before the case was filed and then how muchwork was done for after the case was filed?
A. [Mr. Luttrell] Not really, that I understand. I mean, I thought it was for the –
A. [Ms. Luttrell] The total amount.
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A. [Mr. Luttrell] – the total.
Q. So was it more they said it’s $1,500, and here’s how you’re going to pay it, you’regoing to pay this much up front, and then we need the rest in post-dated checks?
A. [Mr. Luttrell] Yes.
Q. So you weren’t explained, well, we’re going to charge you $500 for coming tothis meeting of creditors or anything of that nature?
A. [Ms. Luttrell] No.
Q. As far as you knew, it’s just a flat fee?
A. [Ms. Luttrell] Yes.
A. [Mr. Luttrell] Yes, as far as we knew.
TRIAL EX. 63 pg.47, ln.7-pg.48, ln.25. With respect to the pre-petition/post-petition nature of the
fees, they also testified to the following:
Q. Has your attorney agreed to reimburse you or the third party for any amount thatthey don’t bill toward? Because – because basically what your contract says, Ibelieve, is that $150 is – is for the work that was done up front, and then there’sanother $1,100 that’s going to be done for work after your case is filed, in the formof a retainer, which basically is like a deposit. So if that deposit’s not used up, havethey told you that they’re going to give you back any of that money?
A. [Mr. Luttrell] No.
A. [Ms. Luttrell] No.
A. [Mr. Luttrell] We wasn’t told we would be getting any money back. Basicallythat –
A. [Ms. Luttrell] This would be paid.
A. [Mr. Luttrell] Our understanding, it was a flat fee pretty much.
Q. And was –
A. [Ms. Luttrell] Bankruptcy, for filing bankruptcy for us.
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. . . .
Q. Do you have any idea what the hourly rate, what your attorney is charging for thismeeting today?
A. [Mr. Luttrell] None whatsoever.
Q. Right, because you just thought it was a flat fee.
A. [Mr. Luttrell] Yes.
TRIAL EX. 63 pg.51, ln.8-pg.52, ln.2; pg.53, ln.10-15.
As to why they used third-party post-dated checks, the Luttrells testified that they were
advised by Clark & Washington that post-dated checks from debtors could no longer be accepted
for payment of attorneys’ fees and the firm would require payment in full up front or third party post-
dated checks, so Ms. Coffey, Ms. Luttrell’s sister, provided them with the post-dated checks. TRIAL
EX. 63 pg.49, ln.1-21. The Debtors also testified that Clark & Washington would have held the
checks and exchanged them for cash, but that they chose to let Ms. Coffey’s checks go through and
had, in fact, repaid Ms. Coffey $157.00. TRIAL EX. 63 pg.49, ln.22-pg.50, ln.9.
The Luttrells received a discharge on May 11, 2010. Based upon the estimated time records
prepared by Clark & Washington and attached to Mr. Burroughs’s Affidavit, the firm devoted a total
of 5.5 hours to the Luttrells’ bankruptcy case, of which 3.3 hours were attributed to pre-petition work
and 2.2 hours were attributed to post-petition work. COLL. TRIAL EX. 97. Of the post-petition hours,
Mr. Burroughs testified at trial that 1.0 hour was actual attorney time. Of the total $1,250.00 fee,42
The Luttrells paid $1,100.00 of their fee for post-petition services which, based upon the estimated time42
records, translates to an hourly rate of $500.00 for the 2.2 post-petition hours, including the 1.0 hour of actual attorney
time estimated by Mr. Burroughs to have been spent on their case.
72
at least two post-dated checks in the amount of $157.14 were deposited by Clark & Washington
post-discharge, and the receipt entered into evidence reflects a balance due of $0.00. JT. STIPS. ¶ 6;
TRIAL EX. 62.
Cynthia Lea Vittetoe(Case No. 10-30326)
On January 19, 2010, Cynthia Lea Vittetoe retained Clark & Washington to represent her in
the filing of her Chapter 7 bankruptcy case, executing in association with this representation the
second post-Waldo Engagement Contract. TRIAL EX. 73; see also TRIAL EX. 101. As to the specific
fees for services to be rendered in the filing of her bankruptcy case, Ms. Vittetoe’s Engagement
Contract contains the following terms:
Client agrees to pay the following fees:
I. Pre-Petition Fees and Services:
. . . .
b. The balance of the pre-Petition fee covers the remaining services required to assistClient in obtaining their required credit counseling certificate, gathering necessaryinformation and documents, advising Client regarding the legal issues involved inClient’s case, advising Client of the upcoming process, advising Client of theirresponsibilities as a debtor, and preparing and filing Client’s bankruptcy pleadings. The fee for these services is a flat fee of $150.00.
. . . . II. Post-Petition Fees and Services:
a. Retainer. As a condition of representation in this case, Client agrees to payAttorney a retainer for services to be rendered post-Petition in Client’s case. Theretainer shall consist of post-dated checks in the total amount of $1,100.00.
73
TRIAL EX. 73. At that time and in accordance with the payment options offered, Ms. Vittetoe
tendered to Clark & Washington, as payment of the $1,250.00 attorneys’ fee provided for by her
Engagement Contract, five post-dated checks from Mrs. David Vittetoe, each in the amount of
$233.80, for deposit into Clark & Washington’s operating account on February 22, 2010, March 22,
2010, April 22, 2010, May 22, 2010, and June 22, 2010, respectively. JT. STIPS. ¶ 1-2; TRIAL EX.
74. Clark & Washington did not specifically instruct Ms. Vittetoe to incur debt to pay her fees but
advised that she could finance the fees for a period of time after the case was filed through post-dated
checks. JT. STIPS. ¶ 3.
The Voluntary Petition commencing Ms. Vittetoe’s Chapter 7 bankruptcy case was filed on
January 27, 2010. Filed contemporaneously with the Voluntary Petition was Ms. Vittetoe’s43
Statement of Financial Affairs, reflecting in response to question 9 concerning payments related to
debt counseling or bankruptcy that a $131.00 attorneys’ fee was paid by Ms. Vittetoe on January 19,
2010. COLL. TRIAL EX. 70. This information is not, however, reflected on the Compensation
Disclosure Statement executed and filed by Mr. Burroughs on January 27, 2010, which disclosed
total compensation of $1,250.00, with $131.00 paid and a balance due of $1,119.00 to be paid “by
third party, Mrs. David Vittetoe, via post-dated checks in the amount of $223.80 each on 2/22/10,
3/22/10, 4/22/10, 5/22/10, 6/22/10.” COLL. TRIAL EX. 71. The Compensation Disclosure Statement
also reflected the following in paragraphs 6 and 7:
6. In return for the above-disclosed fee, I have agreed to render legal service for allaspects of the bankruptcy case, including:
See supra n.8. Ms. Vittetoe executed her documents on January 19, 2010, but the Voluntary Petition is dated43
January 27, 2010, the date upon which her case was filed. See COLL. TRIAL EX. 70.
74
a. [Other provisions as needed]no limitation except as set forth in paragraph 7 below.(i). Other provisions: This fee for pre-petition services is a flat feein the amount of $131.00. The fee for post-Petition services shall becapped at $1,119.00, and charged at a blended rate of $165 per hour. Debtor has provided counsel a retainer for the post-Petition servicesin the form of post-dated checks in the total amount of $ n/a.
7. By agreement with the debtor(s), the above-disclosed fee does not include thefollowing service:
a. These fees do not include certain costs associated with this case. Clientwill be responsible for all court costs, credit counseling costs, and the coststo obtain Client’s credit report. b. The contract between the parties does not include fees for representingClient in adversary proceedings. If Client is served with an adversaryproceeding complaint, Attorney shall take appropriate steps to protect andrepresent Client’s best interests until such time as either Client informsAttorney that Client does not wish to litigate the matter, Client affirmativelydeclines Attorney’s representation, Client obtains other counsel, or Attorneyis allowed to withdraw by the Court.
COLL. TRIAL EX. 71. On February 1, 2010, Mr. Burroughs filed an amended Compensation
Disclosure Statement dated January 29, 2010, with the paragraph 6 language deleted in its entirety.
COLL. TRIAL EX. 71.
Mr. Burroughs also filed an amended Statement of Financial Affairs on behalf of Ms.
Vittetoe on February 3, 2010, listing at question 9 the $131.00 payment received by Clark &
Washington from the Debtor on January 19, 2010, and the five individual $223.80 checks to be paid
to Clark & Washington by Mrs. David Vittetoe dated February 22, 2010, March 22, 2010, April 22,
2010, May 22, 2010, and June 22, 2010, the dates upon which the post-dated checks were to be
deposited. COLL. TRIAL EX. 72. The amended Statement of Financial Affairs contains the Debtor’s
electronic signature but was filed by Mr. Burroughs without first obtaining Ms. Vittetoe’s original
signature. JT. STIPS. ¶ 4.
75
Ms. Vittetoe attended her meeting of creditors on March 2, 2010, at which time the attorney
for the U.S. Trustee questioned her concerning her fee arrangement with Clark & Washington as
follows:
Q. Okay. And did you – do you recognize the terms that were listed here whichsays, in number 1, pre-petition fees and services, that you were charged $150, andthen post-petition fees and services were charged at a hundred – $1,010 – $1,100, doyou recall that?
A. Yes.
Q. Okay. So did you understand that you were going to pay part of it pre-petitionand part of it post-petition?
A. Yes.
TRIAL EX. 75 pg.104, ln.12-22. As to whether Clark & Washington told her that she would get
money back if her case did not take the amount of time to equal to $1,100.00, Ms. Vittetoe testified
that she did not remember but that she had been told she would receive an accounting of her fees at
the end of her case. TRIAL EX. 75, pg.113, ln.6-pg.114, ln.5.
When questioned about using third party post-dated checks, Ms. Vittetoe testified that she
was given the option of either paying the attorneys’ fees in full up front or through third party post-
dated checks. TRIAL. EX. 75 pg.111, ln.7-pg.112, ln.13. She also testified that her mother-in-law
provided her with the post-dated checks at her husband’s request but that the money was never
intended as a gift and she is repaying the amount of each check before it clears the bank. TRIAL EX.
75 pg.108, ln.22-pg.109, ln.5; pg.110, ln.7-pg.111, ln.6.
Ms. Vittetoe has not received a discharge because she has not filed a Certificate of Debtor
Education certifying that she has completed the required post-petition personal financial management
76
course. Based upon the estimated time records prepared by Clark & Washington and attached to Mr.
Burroughs’s Affidavit, the firm devoted a total of 7.2 hours to Ms. Vittetoe’s bankruptcy case, of
which 3.8 hours were attributed to pre-petition work and 3.4 hours were attributed to post-petition
work. COLL. TRIAL EX. 97. Of the post-petition hours, Mr. Burroughs testified at trial that .9 of44
an hour was actual attorney time. Of the total $1,250.00 fee, the receipt entered into evidence45
reflects a balance due of $0.00. TRIAL EX. 74.
Joseph Charles McGee and April Dawn McGee(Case No. 10-30353)
Joseph Charles McGee and April Dawn McGee retained Clark & Washington to represent
them in the filing of their Chapter 7 bankruptcy case, executing in association with this
representation the second post-Waldo Engagement Contract, which was signed by Ms. McGee on
December 22, 2009, and by Mr. McGee on January 23, 2010. COLL. TRIAL EX. 83; see also TRIAL
EX. 101. As to the specific fees for services to be rendered in the filing of their bankruptcy case, the
McGees’ Engagement Contract contains the following terms:
Client agrees to pay the following fees:
I. Pre-Petition Fees and Services:
. . . .
b. The balance of the pre-Petition fee covers the remaining services required to assistClient in obtaining their required credit counseling certificate, gathering necessary
The attachment to Mr. Burroughs’s Affidavit for Ms. Vittetoe’s case reflects a total of 7.4 hours, but that44
figure also includes 0.2 of an hour for collecting and receipting attorney fees.
Ms. Vittetoe paid $1,119.00 of her fee for post-petition services which, based upon the estimated time records,45
translates to an hourly rate of $329.12 for the 3.4 post-petition hours, including the 0.9 hour of actual attorney time
estimated by Mr. Burroughs to have been spent on her case.
77
information and documents, advising Client regarding the legal issues involved inClient’s case, advising Client of the upcoming process, advising Client of theirresponsibilities as a debtor, and preparing and filing Client’s bankruptcy pleadings. The fee for these services is a flat fee of $150.00.
. . . .
II. Post-Petition Fees and Services:
a. Retainer. As a condition of representation in this case, Client agrees to payAttorney a retainer for services to be rendered post-Petition in Client’s case. Theretainer shall consist of post-dated checks in the total amount of $1,100.00.
COLL. TRIAL EX. 83. At that time and in accordance with the payment options offered, the McGees
tendered to Clark & Washington, as payment of the $1,250.00 attorneys’ fee provided for by their
Engagement Contract, $31.00 along with a check from Wayne Sulphin in the amount of $1,219.00
for deposit into Clark & Washington’s operating account on January 27, 2010. JT. STIPS. ¶¶ 1-2;
COLL. TRIAL EX. 83. Clark & Washington did not specifically instruct the McGees to incur debt to
pay their fees but advised that they could finance the fee for a period of time after the case was filed
through post-dated checks. JT. STIPS. ¶ 3.
The Voluntary Petition commencing the McGees’ Chapter 7 bankruptcy case was filed on
January 28, 2010. Filed contemporaneously with the Voluntary Petition was the McGees’46
Statement of Financial Affairs, reflecting in response to question 9 concerning payments related to
debt counseling or bankruptcy that their $31.00 attorneys’ fee was paid by the McGees on
January 23, 2010, and $1,219.00 was paid by Wayne Sulphin on January 26, 2010. COLL. TRIAL EX.
80. This information is inaccurately reflected on the Compensation Disclosure Statement executed
See supra n.8. The McGees executed their documents on December 22, 2009 and January 23, 2010, but the46
Voluntary Petition is dated January 28, 2010, the date upon which their bankruptcy case was filed. See COLL. TRIAL EX.
83.
78
and filed by Mr. Burroughs on January 28, 2010, which disclosed total compensation of $1,250.00,
with $31.00 paid and a balance due of $1,219.00, with the source of compensation “$31.00 paid by
debtor and $1,219.00 paid by Wayne Sulphin.” COLL. TRIAL EX. 81. The Compensation Disclosure
Statement also reflected the following in paragraph 7:
7. By agreement with the debtor(s), the above-disclosed fee does not include thefollowing service:
a. These fees do not include certain costs associated with this case. Clientwill be responsible for all court costs, credit counseling costs, and the coststo obtain Client’s credit report. b. The contract between the parties does not include fees for representingClient in adversary proceedings. If Client is served with an adversaryproceeding complaint, Attorney shall take appropriate steps to protect andrepresent Client’s best interests until such time as either Client informsAttorney that Client does not wish to litigate the matter, Client affirmativelydeclines Attorney’s representation, Client obtains other counsel, or Attorneyis allowed to withdraw by the Court.
COLL. TRIAL EX. 81. On February 1, 2010, Mr. Burroughs filed an amended Compensation
Disclosure Statement dated February 1, 2010, containing the same information as the previously filed
Compensation Disclosure Statement. COLL. TRIAL EX. 81.
The McGees attended their meeting of creditors on March 1, 2010, at which time the attorney
for the U.S. Trustee questioned them concerning their fee arrangement with Clark & Washington,
with Ms. McGee testifying as follows:
Q. Okay. And do you recall discussing with your attorneys any financialarrangements that you could make for the payment of your – of your bankruptcy?
A. Like what do you mean by payment of bankruptcy, the payment that we paid tothem?
Q. Yeah, your attorney fees.
79
A. Oh, yes, uh-huh.
Q. Okay. It shows here on your Attorney/Client Agreement that your agreement wasto pay them $150 for pre-petition services. Is that correct?
A. Yes.
Q. And then post-petition services you were to pay $1,100. Okay. What sort ofservices did – did that include, the pre-petition services?
A. Just everything that they did as far as the paperwork when we came in and went through – wewent through everything with them, and they did their things that they needed to do.
Q. Did they quote you just a general price that it would cost to do your bankruptcy?
A. Yes.
Q. And how much was that?
A. Altogether it was, I mean, including everything, court fees and everything, itended up being like $1,650.
Q. Right. But for the attorney fees, do you recall what that was?
A. I think altogether it was $1,250 or something like that.
TRIAL EX. 82, pg.4, ln.15-pg.5, ln.18.
With respect to actual payment of their attorneys’ fees, Ms. McGee testified that she had
borrowed the money from her father, Wayne Sulphin, who was originally going to do the post-dated
checks but instead gave her one check for payment of the entire $1,219.00, which was paid to Clark
& Washington on January 26, 2010. TRIAL EX. 82, pg.7, ln.12-pg.8, ln.25. She also testified that
she intends to pay Mr. Sulphin back eventually and that she was not advised by Clark & Washington
that the pre-petition debt to her father was dischargeable. TRIAL EX. 82, pg.10, ln.2-17.
80
Following the McGees’ meeting of creditors on March 1, 2010, the U.S. Trustee filed the
Motion of United States Trustee to Compel the Attorneys for the Debtors to Amend the Disclosure
of Compensation and for Sanctions and Notice of Hearing, arguing that the Disclosures filed by Mr.
Burroughs and Clark & Washington did not accurately reflect their fee arrangement or the fact that
the fee had been paid entirely pre-petition. In response to the U.S. Trustee’s motion, later that same
afternoon, Mr. Burroughs filed a second Amended Compensation Disclosure Statement, reflecting
a total fee of $1,250.00, pre-petition receipt of $1,250.00, and a balance due of $0.00. COLL. TRIAL
EX. 81.
The McGees received a discharge on May 7, 2010. Based upon the estimated time records
prepared by Clark & Washington and attached to Mr. Burroughs’s Affidavit, the firm devoted a total
of 6.6 hours to the McGees’ bankruptcy case, of which 3.3 hours were attributed to pre-petition work
and 3.3 hours were attributed to post-petition work. COLL. TRIAL EX. 97. Of the post-petition hours,
Mr. Burroughs testified at trial that .9 of an hour was actual attorney time. Of the total $1,250.0047
fee, the receipt entered into evidence reflects a balance due of $0.00. COLL. TRIAL EX. 83.
Natasha Olivia Womble(Case No. 10-30382)
On December 17, 2009, Natasha Olivia Womble retained Clark & Washington to represent
her in the filing of her Chapter 7 bankruptcy case, executing in association with this representation
the second post-Waldo Engagement Contract. TRIAL EX. 55; see also TRIAL EX. 101. As to the
The McGees paid $1,219.00 of their fee for post-petition services which, based upon the estimated time47
records, translates to an hourly rate of $369.39 for the 3.3 post-petition hours, including the 0.9 hour of actual attorney
time estimated by Mr. Burroughs to have been spent on their case.
81
specific fees for services to be rendered in the filing of her bankruptcy case, Ms. Womble’s
Engagement Contract contains the following terms:
Client agrees to pay the following fees:
I. Pre-Petition Fees and Services:
. . . .
b. The balance of the pre-Petition fee covers the remaining services required to assistClient in obtaining their required credit counseling certificate, gathering necessaryinformation and documents, advising Client regarding the legal issues involved inClient’s case, advising Client of the upcoming process, advising Client of theirresponsibilities as a debtor, and preparing and filing Client’s bankruptcy pleadings. The fee for these services is a flat fee of $150.00.
. . . .
II. Post-Petition Fees and Services:
a. Retainer. As a condition of representation in this case, Client agrees to payAttorney a retainer for services to be rendered post-Petition in Client’s case. Theretainer shall consist of post-dated checks in the total amount of $1,100.00.
TRIAL EX. 55. At that time and in accordance with the payment options offered, Ms. Womble
tendered to Clark & Washington, as payment of the $1,250.00 attorneys’ fee provided for by her
Engagement Contract, $151.00 and five post-dated checks from Deborah Womble, four each in the
amount of $220.00 for deposit into Clark & Washington’s operating account on February 22, 2010,
March 25, 2010, April 25, 2010, and May 25, 2010, and one in the amount of $219.00 to be
deposited on June 25, 2010, respectively. JT. STIPS. ¶ 1-2; TRIAL EX. 56. Clark & Washington did
not specifically instruct Ms. Womble to incur debt to pay her fees but advised that she could finance
the fee for a period of time after the case was filed through post-dated checks. JT. STIPS. ¶ 3.
82
The Voluntary Petition commencing Ms. Womble’s Chapter 7 bankruptcy case was filed on
January 30, 2010. Filed contemporaneously with the Voluntary Petition was Ms. Womble’s48
Statement of Financial Affairs, reflecting in response to question 9 concerning payments related to
debt counseling or bankruptcy that her $1,099.00 attorneys’ fee was paid by the third party payor,
Deborah Womble, through post-dated payments. COLL. TRIAL EX. 53. This information is not,
however, reflected on the Compensation Disclosure Statement executed by Mr. Burroughs on
January 29, 2010 and filed on January 30, 2010, which disclosed total compensation of $1,250.00,
with $151.00 paid and a balance due of $1,099.00 to be paid “by third party, Deborah Womble, via
post dated checks in the amount of $220.00 each on 2/25/10, 3/25/10, 4/25/10, 5/25/10, and $219
on 6/25/10.” COLL. TRIAL EX. 53. The Compensation Disclosure Statement also reflected the
following in paragraph 7:
7. By agreement with the debtor(s), the above-disclosed fee does not include thefollowing service:
a. These fees do not include certain costs associated with this case. Clientwill be responsible for all court costs, credit counseling costs, and the coststo obtain Client’s credit report. b. The contract between the parties does not include fees for representingClient in adversary proceedings. If Client is served with an adversaryproceeding complaint, Attorney shall take appropriate steps to protect andrepresent Client’s best interests until such time as either Client informsAttorney that Client does not wish to litigate the matter, Client affirmativelydeclines Attorney’s representation, Client obtains other counsel, or Attorneyis allowed to withdraw by the Court.
COLL. TRIAL EX. 53.
See supra n.8. Ms. Womble executed her documents on December 17, 2009, but the Voluntary Petition is48
dated January 30, 2010, the date upon which her case was filed. See COLL. TRIAL EX. 53.
83
Mr. Burroughs filed an amended Statement of Financial Affairs on March 23, 2010, on behalf
of Ms. Womble listing at question 9 the $151.00 received by Clark & Washington from Ms. Womble
on January 25, 2010, and the five $220.00 checks paid to Clark & Washington by Deborah Womble
dated February 25, 2010, March 25, 2010, April 25, 2010, and May 25, 2010, and the $219.00 check
dated June 25, 2010, the dates upon which the post-dated checks were to be deposited. TRIAL EX.
54. The amended Statement of Financial Affairs contains the Debtor’s electronic signatures but was
filed by Mr. Burroughs without first obtaining Ms. Womble’s handwritten signature. JT. STIPS. ¶ 4.
Ms. Womble attended her meeting of creditors on March 1, 2010, at which time the attorney
for the U.S. Trustee questioned her concerning her fee arrangement with Clark & Washington. In
response to the U.S. Trustee’s inquiry as to payment of the attorneys’ fees, Ms. Womble testified as
follows:
A. They – I don’t remember what the total fee was. I want to say it was $1,200. I’msorry, that’s been a couple of months ago, so I’m really pulling from my memory.
Q. Does $1,250 sound like the number?
A. Yes.
Q. Okay.
A. And they said that – originally they said that I could make the post-dated checks,but then when I came and saw them at the start of the year again, they said that thosewould have to come from a third party.
. . . .
Q. Okay. And so did you borrow some money from Deborah Womble?
A. Uh-huh.
. . . .
84
Q. Okay. So did you sign a loan document with Ms. Womble?
A. No.
Q. Is that your sister?
A. My mother.
Q. Your mother. And what was your agreement with your mother about paying herback?
A. I just pay her when her check clears.
. . . .
Q. Okay. And so –
A. She was just temporarily being the liaison in order to accommodate with theruling that the judge had brought down, using her check; so basically it’s not – it’sher money that’s initially coming out, but she’s getting it right back, so –
Q. Okay.
A. Does that make sense? So it’s really my money, but hers has been the – I guessthe carrier for it to get done.
Q. Okay. Did she – did she sign an agreement with Clark & Washington?
A. No.
Q. – saying that she would be liable for this? Did she sign an agreement with you?
A. No.
Q. Okay. But you – did she understand that if you didn’t pay her the money, thechecks would still clear the bank –
A. Yes.
Q. – that she would be responsible for that?
A. Yes.
85
Q. Okay. So it was like a loan.
A. I suppose.
Q. Okay. All right. And is your mother – your mother listed as a creditor on yourbankruptcy petition? Did I ask you that?
A. No, but I don’t think that she is.
TRIAL EX. 57 pg.32, ln.5-pg.35, ln.13.
Ms. Womble received a discharge on May 7, 2010. Based upon the itemized records
prepared by Clark & Washington and attached to Mr. Burroughs’s Affidavit, the firm devoted a total
of 6.6 hours to Ms. Womble’s bankruptcy case, of which 4.0 hours were attributed to pre-petition
work and 2.6 hours were attributed to post-petition work. COLL. TRIAL EX. 97. Of the post-petition49
hours, Mr. Burroughs testified at trial that .5 of an hour was actual attorney time. Of the total50
$1,250.00 fee, one post-dated check in the amount of $220.00 and one post-dated check in the
amount of $219.00 were deposited by Clark & Washington post-discharge, and the receipt entered
into evidence reflects a balance due of $0.00. JT. STIPS. ¶ 6; TRIAL EX. 56.
Gary Steven Aaron, II(Case No. 10-30442)
On January 23, 2010, Gary Steven Aaron, II retained Clark & Washington to represent him
in the filing of his Chapter 7 bankruptcy case, executing in association with this representation the
The attachment to Mr. Burroughs’s Affidavit for Ms. Womble’s case reflects a total of 6.8 hours, but that49
figure also includes 0.2 of an hour for collecting and receipting attorney fees.
Ms. Womble paid $1,099.00 of her fee for post-petition services which, based upon the estimated time50
records, translates to an hourly rate of $422.69 for the 2.6 post-petition hours, including the 0.5 hour of actual attorney
time estimated by Mr. Burroughs to have been spent on her case.
86
second post-Waldo Engagement Contract. COLL. TRIAL EX. 77; see also TRIAL EX. 101. As to the
specific fees for services to be rendered in the filing of his bankruptcy case, Mr. Aaron’s Engagement
Contract contains the following terms:
Client agrees to pay the following fees:
I. Pre-Petition Fees and Services:
. . . .
b. The balance of the pre-Petition fee covers the remaining services required to assistClient in obtaining their required credit counseling certificate, gathering necessaryinformation and documents, advising Client regarding the legal issues involved inClient’s case, advising Client of the upcoming process, advising Client of theirresponsibilities as a debtor, and preparing and filing Client’s bankruptcy pleadings. The fee for these services is a flat fee of $150.00.
. . . .
II. Post-Petition Fees and Services:
a. Retainer. As a condition of representation in this case, Client agrees to payAttorney a retainer for services to be rendered post-Petition in Client’s case. Theretainer shall consist of post-dated checks in the total amount of $1,100.00.
COLL. TRIAL EX. 77. At that time and in accordance with the payment options offered, Mr. Aaron
tendered to Clark & Washington, as payment of the $1,250.00 attorneys’ fee provided for by his
Engagement Contract, five post-dated checks from James Carey, each in the amount of $250.00 for
deposit into Clark & Washington’s operating account on March 11, 2010, April 15, 2010, May 13,
2010, June 10, 2010, and July 15, 2010, respectively. JT. STIPS. ¶ 1-2; TRIAL EX. 78. Clark &
Washington did not specifically instruct Mr. Aaron to incur debt to pay his fees but advised that he
could finance the fee for a period of time after the case was filed through post-dated checks. JT.
STIPS. ¶ 3.
87
The Voluntary Petition commencing Mr. Aaron’s Chapter 7 bankruptcy case was filed on
February 5, 2010. Filed contemporaneously with the Voluntary Petition was Mr. Aaron’s Statement51
of Financial Affairs, reflecting in response to question 9 concerning payments related to debt
counseling or bankruptcy that his $1,250.00 attorneys’ fee was paid by the third party payor, James
Carey, through post-dated payments. COLL. TRIAL EX. 76. This information is likewise reflected
on the Compensation Disclosure Statement executed by Mr. Burroughs on February 4, 2010, and
filed on February 5, 2010, which disclosed total compensation of $1,250.00, with $0.00 paid and a
balance due of $1,250.00 to be paid “by third party, James Carey, via post dated checks in the
amount of $250.00 each on 3/11/10, 4/15/10, 5/13/10, 6/10/10, 7/15/10.” COLL. TRIAL EX. 76. The
Compensation Disclosure Statement also reflected the following in paragraph 7:
7. By agreement with the debtor(s), the above-disclosed fee does not include thefollowing service:
a. These fees do not include certain costs associated with this case. Clientwill be responsible for all court costs, credit counseling costs, and the coststo obtain Client’s credit report. b. The contract between the parties does not include fees for representingClient in adversary proceedings. If Client is served with an adversaryproceeding complaint, Attorney shall take appropriate steps to protect andrepresent Client’s best interests until such time as either Client informsAttorney that Client does not wish to litigate the matter, Client affirmativelydeclines Attorney’s representation, Client obtains other counsel, or Attorneyis allowed to withdraw by the Court.
COLL. TRIAL EX. 76.
See supra n.8. Mr. Aaron executed his documents on January 23, 2010, but the Voluntary Petition is dated51
February 5, 2010, the date upon which his case was filed. See COLL. TRIAL EX. 76.
88
Mr. Aaron attended his meeting of creditors on March 9, 2010, at which time the attorney
for the U.S. Trustee questioned him concerning his fee arrangement with Clark & Washington, with
Mr. Aaron testifying as follows:
Q. Did – did they tell you – when you talked to them about what the fee would be,did they tell you that they would be billing you by the hour after the case was filed,or did they say there was just one fee for the whole bankruptcy?
A. Just one – just one set fee for the whole bankruptcy.
TRIAL EX. 79 pg.166, ln.17-23. With respect to his options for payment of the attorneys’ fees, Mr.
Aaron testified to the following:
Q. And so when you met with them did they talk to you about how you could payyour fees?
A. Yes.
Q. Okay. And what were – what did they tell you about that?
A. They told me I could pay it third-party by having, you know, one of my relativesgive them five checks, they can put it through the bank or I could come up there andpay them off as – as they come due, three days before they come due.
Q. Okay. They told you – did you – did you – did the third – was the third partynamed James Carey?
A. Yes, ma’am.
Q. And did Mr. Carey give you the money or did he loan you the money?
A. He loaned me the checks.
Q. He loaned you the checks?
A. Yes.
Q. Did – what was your intent about the checks?
A. I’d pay them off before – you know, go ahead and pay them off as I – you know.
89
Q. Did Clark & Washington tell you that you could arrange it that way, where you’dcome up and pick up the checks before they were cashed?
A. Yeah.
Q. Okay. They told you. Were they aware that you were just borrowing thesechecks –
A. Yeah.
Q. – from Mr. Carey?
A. Yeah.
TRIAL EX. 79 pg.164, ln.4-pg.165, ln.9. He also testified that he was required to bring the post-dated
checks before his case would be filed. TRIAL EX. 79 pg.166, ln.24-pg.167, ln.3.
Mr. Aaron received a discharge on May 25, 2010. Based upon the estimated time records
prepared by Clark & Washington and attached to Mr. Burroughs’s Affidavit, the firm devoted a total
of 4.9 hours to Mr. Aaron’s bankruptcy case, of which 3.3 hours were attributed to pre-petition work
and 1.6 hours were attributed to post-petition work. COLL. TRIAL EX. 97. Of the post-petition52
hours, Mr. Burroughs testified at trial that .9 of an hour was actual attorney time. Of the total53
$1,250.00 fee, one payment in the amount of $250.00 was deposited by Clark & Washington post-
discharge, and the receipt entered into evidence reflects a balance due of $0.00. JT. STIPS. ¶ 6; TRIAL
EX. 78.
The attachment to Mr. Burroughs’s Affidavit for Mr. Aaron’s case reflects a total of 5.2 hours, but that figure52
also includes 0.2 of an hour for receipting Mr. Aaron’s replacement of a check with cash and 0.1 of an hour for time
attributable to these contested matters.
Mr. Aaron paid the entire $1,250.00 fee for post-petition services which, based upon the estimated time53
records, translates to an hourly rate of $781.25 for the 1.6 post-petition hours, including the 0.9 hour of actual attorney
time estimated by Mr. Burroughs to have been spent on his case.
90
Kalenda Faye Knight(Case No. 10-30444)
On January 16, 2010, Kalenda Faye Knight retained Clark & Washington to represent her
in the filing of her Chapter 7 bankruptcy case, executing in association with this representation the
second post-Waldo Engagement Contract. TRIAL EX. 45; see also TRIAL EX. 101. As to the specific
fees for services to be rendered in the filing of her bankruptcy case, Ms. Knight’s Engagement
Contract contains the following terms:
Client agrees to pay the following fees:
I. Pre-Petition Fees and Services:
. . . .
b. The balance of the pre-Petition fee covers the remaining services required to assistClient in obtaining their required credit counseling certificate, gathering necessaryinformation and documents, advising Client regarding the legal issues involved inClient’s case, advising Client of the upcoming process, advising Client of theirresponsibilities as a debtor, and preparing and filing Client’s bankruptcy pleadings. The fee for these services is a flat fee of $150.00.
. . . .
II. Post-Petition Fees and Services:
a. Retainer. As a condition of representation in this case, Client agrees to payAttorney a retainer for services to be rendered post-Petition in Client’s case. Theretainer shall consist of post-dated checks in the total amount of $1,100.00.
COLL. TRIAL EX. 45. At that time and in accordance with the payment options offered, Ms. Knight
tendered to Clark & Washington, as payment of the $1,250.00 attorneys’ fee provided for by her
Engagement Contract, five post-dated checks from Catrina Woods, each in the amount of $250.00
for deposit into Clark & Washington’s operating account on February 26, 2010, March 26, 2010,
91
April 23, 2010, May 21, 2010, and June 18, 2010, respectively. JT. STIPS. ¶ 1-2; TRIAL EX. 46.
Clark & Washington did not specifically instruct Ms. Knight to incur debt to pay her fees but advised
that she could finance the fee for a period of time after the case was filed through post-dated checks.
JT. STIPS. ¶ 3.
The Voluntary Petition commencing Ms. Knight’s Chapter 7 bankruptcy case was filed on
February 5, 2010. Filed contemporaneously with the Voluntary Petition was Ms. Knight’s54
Statement of Financial Affairs, reflecting in response to question 9 concerning payments related to
debt counseling or bankruptcy that her $1,250.00 attorneys’ fee was paid by the third party payor,
Catrina Woods, through post-dated payments. COLL. TRIAL EX. 44. This information is likewise
reflected on the Compensation Disclosure Statement executed by Mr. Burroughs on January 29,
2010, and filed on February 5, 2010, which disclosed total compensation of $1,250.00, with $0.00
paid and a balance due of $1,250.00 to be paid “by third party, Catrina Woods, via post-dated checks
in the amount of $250.00 each on 2/26/10, 3/26/10, 4/23/10, 5/21/10, & 6/18/10.” COLL. TRIAL EX.
44. The Compensation Disclosure Statement also reflected the following in paragraph 7:
7. By agreement with the debtor(s), the above-disclosed fee does not include thefollowing service:
a. These fees do not include certain costs associated with this case. Clientwill be responsible for all court costs, credit counseling costs, and the coststo obtain Client’s credit report. b. The contract between the parties does not include fees for representingClient in adversary proceedings. If Client is served with an adversaryproceeding complaint, Attorney shall take appropriate steps to protect andrepresent Client’s best interests until such time as either Client informsAttorney that Client does not wish to litigate the matter, Client affirmatively
See supra n.8. Ms. Knight executed her documents on January 16, 2010, but the Voluntary Petition is dated54
February 5, 2010, the date upon which her case was filed. See COLL. TRIAL EX. 44.
92
declines Attorney’s representation, Client obtains other counsel, or Attorneyis allowed to withdraw by the Court.
COLL. TRIAL EX. 44.
Ms. Knight attended her meeting of creditors on March 9, 2010, at which time, the attorney
for the U.S. Trustee questioned her concerning her fee arrangement with Clark & Washington. In
response to the U.S. Trustee’s questions, Ms. Knight testified to the following:
Q. Okay. So when you signed this contract, did you read this contract to know whatit said?
A. She explained it to me then, yeah.
Q. Okay. Did she explain to you that you had to pay $150 before your case wasfiled, for your – for your attorney fees, not for the $349?
A. [Ms. Woods ] She said that was in with, that’s what the fees was to file the case,55
file the bankruptcy.
Q. That $349?
A. Yes.
Q. Okay. But after that, did you understand that you had an attorney fee of $1250to pay?
A. [Ms. Woods] Yes. And that’s what they did, that – she said that they can divideit up into monthly payments.
Q. Right. But when this contract that you signed, Ms. Knight, says that you paid$150, where you were to pay that pre-petition, you didn’t do that, did you? Now,we’re not talking about the $349, we’re talking about the $1,250. None of that waspaid prior to the case being filed, is that correct?
[Mr. Burroughs] The $1,250 was in five post-dated checks, right?
During the examination of the Debtor, Kalenda Knight, at her meeting of creditors on March 9, 2010, her55
mother, Katrina Woods, who was also present during the Debtor’s consultation with representatives of Clark &
Washington, was sworn in and testified as to those events.
93
A. [Ms. Woods] Yeah. And they took one post-dated check out of my account.
Q. And that would be in February?
A. [Ms. Woods] Yes.
Q. Right. And so they’ve not given you back $150?
A. [Ms. Woods] No, ma’am.
. . . .
Q. Right. And then there’s four more to go. Is that correct? But when you talkedto them, did you understand that the fee for the bankruptcy was going to be billedseparately for the – for after it was filed at $165 an hour, or did you think that yourfee was, for the whole bankruptcy $1,250?
A. [Ms. Woods] $1,250. She didn’t say nothing about no hourly wages pay, I mean.
Q. Okay. So the woman you talked to didn’t tell you that?
A. She explained it and then she said, “Sign here for me.”
A. [Ms. Woods] Yeah, but she did not state –
A. She didn’t hand me them to read, Mama, she just read it to me.
A. [Ms. Woods] She did, but I’m going to tell you, I know – now, I can’t – it’s herword against mine, but I know she did not state that any hourly of $165 whatever thatis you said, she did not say that.
Q. Okay.
A. [Ms. Woods] All she said was the fees that was left after the $349 was $1,200 orwhatever.
Q. $1,250.
A. $1,250, whatever these five post-dated checks would add up to.
Q. Okay.
94
A. [Ms. Woods] $1,250, right, correct.
Q. And that was to do the whole bankruptcy.
A. [Ms. Woods] Right.
TRIAL EX. 47 [Tr. Knight 341 mtg] at pg. 158, line 8- pg.161, line 5.
Ms. Knight received a discharge on May 17, 2010. Based upon the estimated time records
prepared by Clark & Washington and attached to Mr. Burroughs’s Affidavit, the firm devoted a total
of 5.2 hours to Ms. Knight’s bankruptcy case, of which 3.4 hours were attributed to pre-petition work
and 1.8 hours were attributed to post-petition work. COLL. TRIAL EX. 97. Of the post-petition hours,
Mr. Burroughs testified at trial that 1.0 hour was actual attorney time. Of the total $1,250.00 fee,56
two post-dated checks, each in the amount of $250.00, were deposited by Clark & Washington post-
discharge, and the receipt entered into evidence reflects a balance due of $0.00. JT. STIPS. ¶ 6; TRIAL
EX. 46.
II
The Pretrial Order sets forth a number of issues which, for the purposes of this memorandum,
can be divided into two distinct categories: the appropriateness of Clark & Washington’s fee
arrangements and the accuracy of the firm’s filings with the court, to be followed by a third
subsection addressing the imposition of sanctions.
Ms. Knight paid the entire $1,250.00 fee post-petition which, based upon the estimated time records,56
translates to an hourly rate of $694.44 for the 1.8 post-petition hours, including the 1.0 hour of actual attorney time
estimated by Mr. Burroughs to have been spent on her case. That estimation not withstanding, at trial, Mr. Burroughs
also identified the “KB” referenced in the estimated time records as having spent the one hour of attorney time meeting
with Ms. Knight and her mother as Katherine Brown, who was a non-licensed attorney. See supra n.22.
95
A
The first set of issues focuses upon Clark & Washington’s practices concerning its
engagement and fee arrangement with its clients. Specifically, whether the post-Waldo engagement
contracts and fee arrangements employed by Clark & Washington and implemented by Mr.
Burroughs as managing attorney for its Knoxville office constitute true “straddle” arrangements for
the division of pre- and post-petition fees and services in compliance with the directives of Waldo. 57
One of the primary issues in Waldo was whether or not the engagement contract and fee
arrangement between Clark & Washington and the respective debtors under the terms of which the
firm collected, pre-petition, post-dated checks drawn on debtor accounts for deposit post-petition
constituted pre-petition debts, subject to discharge. After analyzing case law from this jurisdiction,
as well as others, this court concluded that “the attorneys’ fees in each case [were] flat fees which
arose pre-petition, irrespective of when services were to be rendered.” Waldo, 417 B.R. at 883; see
also In re Griffin, 313 B.R. 757, 762-63 (Bankr. N.D. Ill. 2004) (“Under the Bankruptcy Code, a
contract-based claim is a pre-petition claim if prior to filing[,] the relationship between the debtors
and the creditor contained all the necessary elements to create a right to payment under the relevant
contract.”). This court went on to then state the following:
[A]cceptance of post-dated checks for payment of “flat-fee” or “no-look” attorney’sfees is not an acceptable practice and runs afoul of the Bankruptcy Code and FederalRules of Bankruptcy Procedure, [and finds] the division of a flat fee arrangement intopre-petition and post-petition parts to be conceptually inconsistent and therefore
The parties have stipulated that the contract used in the Soles case was a pre-Waldo contract and in violation57
of the court’s directives therein. JT. STIPS. ¶ 7. At trial, Mr. Burroughs testified that the pre-Waldo engagement contract
was mistakenly used; however, the Soleses’ Engagement Contract was executed on October 22, 2009, prior to entry of
the Waldo decision, but the case itself was filed post-Waldo, on December 14, 2009. See TRIAL EX. 41.
96
untenable. The Court therefore joins those other courts which hold that when a flator fixed fee pre-petition agreement is at issue, the fee must be paid in full prior to thecommencement of the debtor’s case or the fee is discharged under § 727(b).
Waldo, 417 B.R. at 882, 885 (quoting In re Mansfield, 394 B.R. 783, 791 (Bankr. E.D. Pa. 2008)).
In summary, this court held that “because ‘flat fee’ or ‘no-look’ attorney’s fees contracted for pre-
petition are dischargeable, it is unacceptable for attorneys to ask for and receive post-dated checks
from Debtors to be cashed post-petition as payment of those fees.” Waldo, 417 B.R. at 886.
Recognizing, however, that attorneys should be compensated for the services they provide,
this court, at the conclusion of the Waldo opinion, gave the following three examples of potentially
allowable methods for payment of attorneys’ fees in Chapter 7 cases: “(1) requiring Chapter 7
debtors to pay ‘flat’ or ‘no-look’ attorney’s fees in full prior to filing; (2) revising retainer
agreements and expressly designating pre-petition services, which are paid pre-petition, and post-
petition services, which shall be paid post-petition; or (3) accepting payments by third parties.”
Waldo, 417 B.R. at 895.
Immediately following entry of the Waldo decision, Mr. Thomson drafted the initial post-
Waldo contract, and Mr. Crawford, the managing attorney of the Knoxville office at that time,
instructed the Knoxville office to stop taking post-dated debtor checks. That practice was resumed,
however, after Mr. Crawford left the firm in November 2009, and Mr. Burroughs was instructed by
the Atlanta office to begin taking post-dated debtor checks once again under the post-Waldo
“straddle” contract, continuing until January 2010, when Mr. Clark instructed the Knoxville office
97
to only take post-dated third party checks. Additionally, Mr. Burroughs testified that although the58
Knoxville office ceased collecting post-dated checks written on debtor accounts, it continued
depositing post-dated checks received prior to entry of the Waldo decision and it has continued
depositing post-dated checks written on debtor accounts in its possession.
In support of Clark & Washington’s post-Waldo “straddle” contract, Mr. Thomson testified
that in the immediate aftermath of the Waldo opinion, he instructed all of the Knoxville offices not
to take post-dated debtor checks for a few days and began drafting a revised engagement contract
that provided for receipt of post-dated checks pre-petition in contemplation of post-petition services
while correcting the major three problems pointed out by the court. To that end, the initial and
second post-Waldo engagement contracts both remove a statement that attorneys’ fees are non-
refundable, remove all carve-outs other than for adversary proceedings and amendments, segregate
pre-petition and post-petition services, add language advising that pre-petition debts are subject to
discharge, and add language that debtors may consult other counsel concerning the acceptability of
post-dated checks. See TRIAL EX. 100; TRIAL EX. 101. These contracts also provided for debtors
to pay a minimal flat fee, usually $150.00, when the contract was signed, with that amount
designated for pre-petition services, and to pay the remaining balance of the fees due via post-dated
checks, with that amount designated for post-petition services. See TRIAL EX. 100; TRIAL EX. 101.
These are the engagement contracts executed by all of the Debtors in these contested matters with
the exception of the Soleses, who executed the pre-Waldo contract.
Amanda Stofan, managing attorney for Clark & Washington’s Chattanooga office, testified that the “straddle”58
contract was used in Chattanooga from November 2009 through the end of April 2010, at which time that office stopped
taking debtor post-dated checks as payment for its attorneys’ fees.
98
In spite of the assertions by Mr. Thomson, Mr. Clark, Mr. Burroughs, and Ms. Stofan to the
contrary, neither of the post-Waldo engagement contracts is a true “straddle” agreement and neither
complies with Waldo. Regardless of Clark & Washington’s purported attempt to bifurcate the
attorneys’ fees into pre- and post-petition services, the fact remains that each of the Engagement
Contracts in these fifteen cases was entered into pre-petition, as was the obligation for payment.
Each Engagement Contract is prefaced with the phrase, “Client agrees to pay the following fees” and
then fixes the liability of the respective Debtors at the full amount of the pre- and post-petition
figures inserted into the respective Engagement Contracts. As stated in Waldo, “[i]f these
arrangements were true ‘saddle obligations’ as argued by Clark & Washington and Mr. Crawford,
they would not collect post-dated checks pre-petition in anticipation of post-petition services but
would, instead, seek payment for post-petition services as rendered post-petition.” Waldo, 417 B.R.
at 883-84. The engagement contracts themselves, as well as the testimony at trial can lead to no
other conclusion – these are “flat fee” contracts.
The post-Waldo engagement contracts attempt to bifurcate fees, advising clients that they
have paid their “minimal flat fee” for pre-petition fees and that they, “[a]s a condition of59
representation,” have agreed to pay “a retainer for services to be rendered post-petition” to consist
of post-dated checks totaling the remaining amount. See COLL. TRIAL EX. 4; TRIAL EX. 9; TRIAL EX.
15; TRIAL EX. 22; COLL. TRIAL EX. 29; TRIAL EX. 35; TRIAL EX. 45; COLL. TRIAL EX. 51; TRIAL EX.
55; TRIAL EX. 61; TRIAL EX. 67; TRIAL EX. 73; COLL. TRIAL EX. 77; COLL. TRIAL EX. 83; TRIAL EX.
With the exception of the Lawsons, for whom the entire $800.00 paid was stated to be their “flat fee,” and59
the Harts, for whom the “flat fee” was stated to be $201.00, the “flat fee” for the remaining Debtors executing post-Waldo
engagement contracts was stated to be $150.00.
99
100; TRIAL EX. 101. The engagement contracts then go on to provide that the retainer will be applied
to post-petition services and “is based upon a blended hourly rate of $165” with the fees “capped at
the amount of the retainer listed above, regardless of the amount of services expended in excess
thereof” and that “[t]he parties contemplate that the value of the post-petition services rendered . .
. shall meet or exceed the total amount of the quoted retainer.” See COLL. TRIAL EX. 4; TRIAL EX.
9; TRIAL EX. 15; TRIAL EX. 22; COLL. TRIAL EX. 29; TRIAL EX. 35; TRIAL EX. 45; COLL. TRIAL EX.
51; TRIAL EX. 55; TRIAL EX. 61; TRIAL EX. 67; TRIAL EX. 73; COLL. TRIAL EX. 77; COLL. TRIAL EX.
83; TRIAL EX. 100; TRIAL EX. 101. Clients are then advised that they are “entitled to request a final
accounting of the fees charged by Attorney in this case and thereafter receive a refund of any amount
of the retainer paid in excess of the post-petition services rendered.” See COLL. TRIAL EX. 4; TRIAL
EX. 9; TRIAL EX. 15; TRIAL EX. 22; COLL. TRIAL EX. 29; TRIAL EX. 35; TRIAL EX. 45; COLL. TRIAL
EX. 51; TRIAL EX. 55; TRIAL EX. 61; TRIAL EX. 67; TRIAL EX. 73; COLL. TRIAL EX. 77; COLL. TRIAL
EX. 83; TRIAL EX. 100; TRIAL EX. 101.
Despite the foregoing language in the engagement contracts, although attorneys and staff in
the Knoxville office are required to keep track of the services performed by logging their activities
in a database as or soon after services are rendered, neither the attorneys nor the paralegals
contemporaneously record incremental time allotments with those logged entries. JT. STIPS. ¶ 5.
Additionally, Clark & Washington does not routinely provide itemized statements or accountings
of post-petition services to debtors. In fact, Mr. Burroughs testified that only one debtor has asked
for an accounting and only after an inquiry by the U.S. Trustee’s office. Ms. Stofan testified that
100
none of the firm’s Chattanooga clients has requested an accounting, nor has that office ever provided
a client with an itemized statement of services rendered. JT. STIPS. ¶ 9.
As for what each of the Debtors understood, their testimony clearly evidences that each of
them thought that they were paying a flat fee for their bankruptcy case. When asked how much
Clark & Washington was going to charge for doing the pre-petition work and how much would be
charged for the post-petition work, Ms. Lawson testified that it wasn’t specified that a certain amount
would be designated for either, but that “[t]hey just said everything would be in that $800.00.
Everything would be included in that.” COLL. TRIAL EX. 11 [K. Lawson] at pg.15, ln.11-22; pg.18,
ln.15-pg.19, ln.6. Similarly, Ms. Newman testified that she did not realize she would be charged
different amounts for the work performed by Clark & Washington pre-petition and post-petition, that
she understood the entire fee to cover everything. TRIAL EX. 30 pg.213, ln.4-11. Ms. Dickerson
testified that she understood that the attorney fee would cover their whole bankruptcy. TRIAL EX.
17 pg.187, ln.17-pg.188, ln.10. Ms. Zick testified that she simply thought the cost of her bankruptcy
was a thousand or so dollars. TRIAL EX. 25 pg.13, ln.1-8. Ms. Woods’ mother testified that she and
her daughter understood the fee to be $1,250.00 for the entire bankruptcy case. TRIAL EX. 47 pg.160,
ln.22-pg.161, ln.5. Ms. Sanchez testified that she and Mr. Sanchez were actually quoted $1,250.00
as the entire fee for filing their case by the person they met with at Clark & Washington, as did Mr.
Cox, Mr. Hoffman, Ms. Vittetoe, the McGees, and Ms. Womble, TRIAL EX. 37 pg.11, ln.6-19;
TRIAL EX. 69 pg.220, ln.5-20; COLL. TRIAL EX. 51 pg.9, ln.9-11; TRIAL EX. 75 pg.106, ln.1-8; TRIAL
EX. 82 pg.5, ln.8-18; TRIAL EX. 57 pg.32, ln.5-14. Additionally, Mr. Aaron testified at his meeting
101
of creditors that all he remembered was that he had to pay $350.00 in advance plus provide post-
dated checks totaling $1,250.00. TRIAL EX. 79 pg.163, ln.14-pg. 164, ln.14.
When questioned about the retainer at trial, Mr. Burroughs testified that, pursuant to the
terms of the engagement contracts, any unused portions should be refunded. He then stated,
however, that Clark & Washington attorneys and paralegals do not keep track of their time and do
not bill at an hourly rate and that the firm has not returned any unused retainers to debtors.
Additionally, Mr. Burroughs testified that the Debtors were aware, on the dates they signed their
contracts, the total amount of attorneys’ fee to be charged, inclusive of both the $150.00 pre-petition
fee and the agreed upon post-petition “retainer” in the form of post-dated checks, and that receipt
of payment in full of that retainer, through post-dated debtor or third-party checks, was a condition
of and prerequisite to Clark & Washington filing any debtor’s case. Similarly, Mr. Thomson
testified that each Debtors’ obligation to pay the entire amount of fees arose at the time the contract
was executed and if not paid, the non-paying debtors would have been in breach of contract.
With respect to his Affidavit introduced into evidence as Trial Exhibit 97, Mr. Burroughs
testified that he did not personally compile the time records attached thereto, but that paralegals in
his firm estimated the time amounts based upon notes contained in a database kept by Clark &
Washington, after which Mr. Burroughs reviewed the records and made revisions. No time records
were kept within the database, and all time entries were based on estimates assigned by the
paralegals who prepared the attachments. His testimony was corroborated by Ms. Stofan, who
testified that although the “straddle” contract provides for a blended hourly rate of $165.00 for
attorneys and paralegals, she has never established an hourly rate and does not keep time records.
102
Significantly, the time estimates were prepared pursuant to the court’s directives set forth in the
Pretrial Order entered on May 14, 2010, and not periodically as each case progressed. The $165.00
“blended hourly rate” allegedly charged by Clark & Washington for post-petition services appears
to be nothing more than a convenient figure to be utilized in estimating the post-petition fees in the
unlikely event a debtor should request an accounting. However, as evidenced by the court’s
calculations set forth earlier in each Debtors’ factual section, the $165.00 “blended hourly rate” is
merely a fiction. Clearly, Clark & Washington never intended to account to these Debtors for the
unused portion of any attorneys’ fee.
Mr. Thomson’s and Mr. Burroughs’ s testimony that the “straddle” contract provides a true
breakdown between pre- and post-petition fees is also contradicted by the receipts issued to the
respective debtors in each case which contains a blocked-off section providing the following
information:
PERSONAL CHECK POLICY:1. Checks are verified prior to filing your case2. Your case will not be filed until the full amount due is paid in advance3. No personal checks if you have NSF Debts4. There will be a $25.00 charge for each returned check5. No out of state or starter checks6. All fees paid are not refundable
COLL. TRIAL EX. 4; TRIAL EX. 10; TRIAL EX. 16; TRIAL EX. 23; COLL. TRIAL EX. 29; TRIAL EX.
36;TRIAL EX. 42; TRIAL EX. 46; TRIAL EX. 52; TRIAL EX. 56; TRIAL EX. 62; TRIAL EX. 68; TRIAL EX.
74; TRIAL EX. 78; COLL. TRIAL EX. 83. The receipts, with the exception of the Harts’ and McGees’,60
contradicts Mr. Burroughs’s testimony that Clark & Washington’s Knoxville office does not pursue
Items 4 and 6 are not a part of the PERSONAL CHECK POLICY contents set forth in the receipts issued by60
Clark & Washington to the Harts and the McGees. COLL. TRIAL EX. 4; COLL. TRIAL EX. 83.
103
its clients for payment on post-dated checks returned for insufficient funds. Also, with the exception
of the Hart and McGee cases, item 6 contravenes the provision in each Engagement Contract that
“Client is entitled to . . . receive a refund of any amount of the retainer paid in excess of the value
of the post-Petition services rendered.” See TRIAL EX. 9; TRIAL EX. 15; TRIAL EX. 22; COLL. TRIAL
EX. 29; TRIAL EX. 35; TRIAL EX. 45; COLL. TRIAL EX. 51; TRIAL EX. 55; TRIAL EX. 61; TRIAL EX.
67; TRIAL EX. 73; COLL. TRIAL EX. 77; TRIAL EX. 100; TRIAL EX. 101.
With respect to post-dated checks received from debtors and written on debtor accounts, the
message in Waldo is clear: “It is not proper for a bankruptcy attorney to accept post-dated checks
from a Chapter 7 debtor client, and the use of [this] method of fee payment has been consistently
rejected by bankruptcy courts.” Waldo, 417 B.R. at 886 (citations omitted). Under no type of
contract will the court condone acceptance of post-dated checks from debtors written on their
accounts, to be cashed post-petition, as payment of attorneys’ fees. As discussed in detail, “there are
serious ethical implications in such a practice,” raising “the question and the appearance” of a
conflict of interest between Clark & Washington and the affected debtors. Waldo, 417 B.R. at 886-
87. Clark & Washington’s attempts to camouflage its flat fee by bifurcating it into a minimal pre-61
Specifically, Waldo states the following:61
As raised by many of the courts examining the issue of post-dated checks, there are serious ethical
implications in such a practice, and the same is true here – that by accepting post-dated checks for
dischargeable debts and not advising their clients that the debts were at least potentially dischargeable,
Clark & Washington and Mr. Crawford created a conflict of interest with the Debtors under
Tennessee’s disciplinary rules. Rule 1.8(a) of the Rules of Professional Conduct states, in material
part, as follows:
Rule 1.8 Conflict of Interest; Prohibited Transactions.
(a) A lawyer shall not . . . knowingly acquire an ownership, possessory, security or
other pecuniary interest adverse to a client unless:
(continued...)
104
petition amount and a much larger post-petition amount is disingenuous at best, especially in light
of the evidence that in none of the cases presently before the court did the assigned time for services
rendered come anywhere close to equaling the “retainer” amount multiplied by the $165.00 “blended
hourly rate.”
The court also finds the practice of accepting post-dated checks from third parties to be
suspect and borderline violative of the Bankruptcy Code’s prohibition on advising debtors to incur
debt in anticipation of filing for bankruptcy. Section 526(a) states that debt relief agencies –
including attorneys – shall not do any of the following:
(1) fail to perform any service that such agency informed an assisted person orprospective assisted person it would provide in connection with a case or proceedingunder this title;
(2) make any statement, or counsel or advise any assisted person or prospectiveassisted person to make a statement in a document filed in a case or proceeding under
(...continued)61
(1) The transaction and terms on which the lawyer acquires the interest are
fair and reasonable to the client and are fully disclosed and transmitted in
writing to the client in a manner that can be reasonably understood by the
client; and
(2) The client is given a reasonable opportunity to seek the advice of
independent counsel in the transaction; and
(3) The client consents thereto in a writing signed by the client.
TENN . SUP. CT. R. 8, Rule 1.8(a). As stated in the official comments to Rule 1.8, “[a]s a general
principle, all transactions between client and lawyer should be fair and reasonable to the client. In
such transactions, a review by independent counsel on behalf of the client is advisable. Furthermore,
a lawyer may not exploit information relating to the representation to the client’s disadvantage.” OFF.
CM TS., TENN . SUP. CT. R. 8, Rule 1.8(a). Accordingly, “[t]he existence of a conflict of interest does
not require bad motive or intent. Most often it arises where the attorney’s duty to one client conflicts
with his/her duty to another or with the attorney’s self-interest.” In re Martin, 197 B.R. 120, 128
(Bankr. D. Colo. 1996).
Waldo, 417 B.R. 886.
105
this title, that is untrue and misleading, or that upon the exercise of reasonable care,should have been known by such agency to be untrue or misleading;
(3) misrepresent to any assisted person or prospective assisted person, directly orindirectly, affirmatively or by material omission, with respect to –
(A) the services that such agency will provide to such person; or
(B) the benefits and risks that may result if such person becomes a debtor ina case under this title; or
(4) advise an assisted person or prospective assisted person to incur more debt incontemplation of such person filing a case under this title or to pay an attorney orbankruptcy petition preparer fee or charge for services performed as part of preparingfor or representing a debtor in a case under this title.
11 U.S.C. § 526(a); see 11. U.S.C. § 101(12A) (2006) (defining “debt relief agency” in material part
as “any person who provides any bankruptcy assistance to an assisted person in return for the
payment of money or other valuable consideration[.]”); Milavetz, Gallop & Milavetz, P.A. v. United
States, 130 S. Ct. 1324, 1332 (2010). In Milavetz, the Supreme Court held that Ҥ 526(a)(4)[, which
is best understood to provide an additional safeguard against the practice of loading up on debt prior
to filing,] prohibits a debt relief agency only from advising a debtor to incur more debt because the
debtor is filing for bankruptcy, rather than for a valid purpose.” Milavetz, 130 S. Ct. at 1336.
Without finding conclusively that Clark & Washington has violated § 526(a)(4), the court
is nevertheless troubled by the acceptance of third-party post-dated checks. With respect to the
firm’s procedure concerning third party checks, Mr. Burroughs testified that debtors are advised that
they can ask a family member or neighbor to “gift” them the attorneys’ fee, with the understanding
that there is no requirement for the debtors to repay them, but that he never advised clients to take
out a pre-petition loan from any source to fund the attorneys’ fees. He also testified that there is no
106
pre-petition, dischargeable debt owed to the third parties because the fee is earned and paid post-
petition. Likewise, Mr. Thomson argued that acceptance of third-party post-dated checks, as well
as any attempts to collect upon them, does not violate Waldo because §§ 362(a) and 524(a) do not
apply to such payments made by third parties.
Messrs. Burroughs and Thomson’s testimony, however, contradicts testimony offered by the
various Debtors with respect to what was intended when they were advised by Clark & Washington
to tender third-party post-dated checks. For example, Ms. Lawson testified that she and her husband
are reimbursing Mr. Perlioni, the family friend who wrote the post-dated checks for their bankruptcy
case, with cash and that he never intended to ‘gift’ them the money or to pay for their attorneys’ fees.
COLL. TRIAL EX. 11 [K. Lawson] pg.8, ln.10-pg.10, ln.9. Similarly, Mr. Cox testified that his
girlfriend provided the post-dated checks but it was never intended that she would pay for his
bankruptcy case. TRIAL EX. 69 pg.223, ln.13-22; pg.230, ln.18-pg.231, ln.9. Likewise, Ms. Vittetoe
testified that her mother-in-law had provided the post-dated checks, but she and Mr. Vittetoe were
repaying her the $223.80 prior to each check clearing the bank, TRIAL EX. 75 pg.108, ln.22-pg.109,
ln.5; pg.110, ln.7-pg.111, ln.6, and Ms. Womble testified that she had agreed to repay her mother,
from whom she had received the post-dated checks, when each one cleared the bank. Trial Ex. 57,
pg.33, ln.14-21.
Even more telling as to the true nature of these third-party payments, the Luttrells testified
to the following:
Q. So your attorneys told you you couldn’t write your own post-dated checks?
107
A. [Ms. Luttrell] At first, when we met with them in December, they said that wecould do our own post-dated checks, but when we met with them again in Januarythey said that that was not going to work anymore, that we could either, I guess, Idon’t know if they said we could pay it all up front –
A. [Mr. Luttrell] Yeah, we could pay it up front –
A. [Ms. Luttrell] – or we could do third-party.
A. [Mr. Luttrell] – or we could do third-party.
A. [Ms. Luttrell] And that’s what we chose.
A. [Mr. Luttrell] And they would hold the checks and we could bring the money inand they would, you know, get the check – we could get the checks back or whatever.
A. [Ms. Luttrell] Or they would shred them through.
. . . .
A. [Mr. Luttrell] So we just let them run them through and we pay her sister.
Q. And have you paid her sister any payments yet?
A. [Mr. Luttrell] Yes.
A. [Ms. Luttrell] Yes. One check’s went through and we paid for it.
TRIAL EX. 63, pg.49, ln.10-pg.50, ln.9. Similarly, Mr. Aaron testified to the following:
Q. And so when you met with them did they talk to you about how you could payyour fees?
A. Yes.
Q. Okay. And what were – what did they tell you about that?
A. They told me I could pay it third-party by having, you know, one of my relativesgive them five checks, they can put it through the bank or I could come up there andpay them off as – as they come due, three days before they come due.
Q. Okay. They told you – did you – did you – did the third – was the third partynamed James Carey?
108
A. Yes, ma’am.
Q. And did Mr. Carey give you the money or did he loan you the money?
A. He loaned me the checks.
Q. He loaned you the checks?
A. Yes.
Q. Did – what was your intent about the checks?
A. I’d pay them off before – you know, go ahead and pay them off as I – you know.
Q. Did Clark & Washington tell you that you could arrange it that way, where you’dcome up and pick up the checks before they were cashed?
A. Yeah.
Q. Okay. They told you. Were they aware that you were just borrowing thesechecks –
A. Yeah.
Q. – from Mr. Carey?
A. Yeah.
TRIAL EX. 79 pg.164, ln.4-pg.165, ln.9. In fact, as can be gleaned from the Debtors’ testimony, it
appears that not only did Clark & Washington know that many – if not a majority – of debtors using
third-party checks were, in fact, repaying those third parties, but Clark & Washington, through its
attorneys and staff, were instructing debtors to bring in post-dated checks from third-parties while
advising them that, if they so desired, the debtors themselves could come in and replace the post-
dated checks with cash prior to the dates upon which the checks were to be deposited.
109
To state it plainly, the court finds that a pre-petition contract which fixes or predetermines
the total amount of the fee a debtor is required to pay for both pre- and post-petition services
establishes a “flat fee” under the authority of Waldo, and the collecting of post-dated checks is
prohibited, irrespective of the source. As discussed, a true “saddle” contract contemplates a billing
relationship, wherein services are rendered post-petition and the client is billed an hourly rate post-
petition based upon the time spent, after the services have actually been performed. None of the
Engagement Contracts in these contested matters complies with this basic concept and none
complies with the court’s decision in Waldo.62
B
With respect to the second category, the inaccurate Compensation Disclosure Statements and
unsigned Amended Statements of Financial Affairs filed by Clark & Washington, the court finds that
although Clark & Washington has acknowledged its mistakes, the fact remains that it did not take
the care and attention necessary to ensure that the documents it filed with the court were accurate
and properly filed. The statutory authority and procedural rules relating to the disclosure of
compensation were fully addressed in Waldo. The court examined the combined role played by
§ 329(a) and Rule 2016(b) of the Federal Rules of Bankruptcy Procedure in providing a system for
monitoring of attorneys’ fees, allowing courts to “carefully scrutinize” compensation paid by debtors
and stressed that full and accurate disclosure was “mandatory” and “‘[a]nything less than the full
Moreover, because the fee arrangements in each of the Debtors’ cases constitutes a pre-petition “flat fee”62
obligation, as the court has previously held, by depositing and/or cashing after discharge any payments – whether by cash
or post-dated check – received from or on behalf of any of the Debtors for satisfaction of that fee, Clark & Washington
and Mr. Burroughs may have violated the discharge injunction of 11 U.S.C. § 524(a) (2006). Waldo, 417 B.R. at 890.
110
measure of disclosure’ is unacceptable.” Waldo, 417 B.R. 893 (citations omitted). As such, it is not
necessary for the court to revisit these issues again in great detail other than to reiterate that “[t]he
failure to comply with the disclosure rules is a sanctionable violation, even if proper disclosure
would have shown that the attorney had not actually violated any Bankruptcy Rules, and sanctions
may also be imposed for negligent or inadvertent failures to disclose.” Waldo, 417 B.R. at 893
(citations omitted).
Clark & Washington and Mr. Burroughs do not deny that they filed inaccurate Rule 2016(b)
compensation disclosure statements in the Lawson, Hart, Newman, Soles, Sanchez, Dickerson, Zick,
Cox, Hoffman, Luttrell, Vittetoe, McGee, and Womble cases. Mr. Burroughs testified that following
entry of the Hart show cause order, he discovered errors on several of the Rule 2016(b)
Compensation Disclosure Statements, and he filed amended disclosures for all Chapter 7 cases filed
by Clark & Washington post-Waldo to remove the straddle contract language, which had been
inserted on the firm-wide template by its main office in Atlanta. The court’s review of the
Compensation Disclosure Statements in these contested matters not only confirms that the original
disclosures made by Clark & Washington and Mr. Burroughs in each case were incomplete, but also
that, notwithstanding Mr. Burroughs’s attempts to correct them, the Amended Compensation
Disclosure Statements he filed still do not reflect the true nature of the respective Debtors’
Engagement Contracts. In fact, as of the date of this Memorandum, Clark & Washington and Mr.
Burroughs still have not provided full and accurate disclosure of the firm’s fee arrangements with
some of these Debtors.
111
Mr. Burroughs also testified that he had a conversation with the attorney for the U.S. Trustee,
who brought it to his attention that the original Statements of Financial Affairs in many of the cases
were inaccurate with respect to question 9, and that following that conversation, he prepared and
filed Amended Statements of Financial Affairs on behalf of the Lawsons, the Harts, Ms. Newman,
the Soleses, the Sanchezes, the Dickersons, Ms. Zick, the Luttrells, Ms. Vittetoe, and Ms. Womble
in an attempt to more accurately reflect the payment arrangements, but in his haste to revise and file
the Amended Statements of Financial Affairs, he did not send them to the respective Debtors for
execution. Accordingly, he and Clark & Washington do not deny that they filed the Amended
Statement of Financial Affairs on behalf of the Debtors in the Lawson, Newman, Soles, Sanchez,
Dickerson, Zick, Cox, Hoffman, Luttrell, Vittetoe, and Womble cases without first obtaining the
Debtors’ permission and handwritten signatures as required by section III.A.3 of the Administrative
Procedures for Electronic Case Filing, effective May 17, 2005, as amended, which states in material
part:
III. Electronic Filing
A. Signatures
. . . .
3. Signature of Debtor on Petition, Lists, Schedules, Statements, and OtherDocuments
112
Notwithstanding paragraph 2[ ] immediately above, any petition, list, schedule,63
statement, and amendment thereto that requires the debtor’s signature may be filedelectronically by a Registered User with the debtor’s signature indicated as “/s/”followed by the typed name of the debtor, provided the debtor has actually signed acopy of the document and the filing attorney retains the signed document as requiredby paragraph 5[ ] below.64
4. Attorney RepresentationElectronic filing of a verified document by an attorney is a representation for thepurposes of Fed. R. Bankr. P. 9011[ ] that the person or persons required to sign and65
verify the document did in fact sign and verify it before it was filed.
E.D. Tenn. Admin. Procs. at ¶ III.A. See JT. STIPS. ¶ 4. In explanation, Mr. Burroughs testified that
he was merely wanting to fix the errors in Clark & Washington’s earlier filings and that it was never
his intention to misled the court or the U.S. Trustee by filing the Amended Statements of Financial
Affairs without first obtaining the Debtors’ handwritten signatures.
63
2. Signatures on Affidavits, Declarations, Verified Documents, and Reaffirmation Agreements
Except as provided in paragraph 3 immediately below, each affidavit, unsworn declaration under
penalty of perjury, verified document, or reaffirmation agreement filed or submitted for filing must
contain actual handwritten signatures. The “/s/” type of signature is not permitted on these types of
documents. Registered Users filing such documents should scan and file them electronically after they
have been signed (and, in the case of an affidavit, signed by the notary public and affixed with a
notarial seal).
E.D. Tenn. Admin. Procs. at ¶ III.A.2.
64
5. Retention of Documents
With respect to the documents described in paragraph 3 above, original documents bearing the
debtor’s actual signature must be maintained in paper form by the filing attorney until two years after
the closing of the case. On request of the court, the attorney must provide such documents for review.
E.D. Tenn. Admin. Procs. at ¶ III.A.5.
“When these rules require copies of a signed or verified paper, it shall suffice if the original is signed or65
verified and the copies are conformed to the original.” FED . R. BANKR. P. 9011(f).
113
Because there is no dispute that Clark & Washington and Mr. Burroughs filed inaccurate
Rule 2016 Compensation Disclosure Statements and improperly and in violation of the
Administrative Procedures for Electronic Case Filing, incorporating Rule 9011, the question
becomes whether disgorgement is the appropriate sanction or if, as the U.S. Trustee asserts,
something harsher is required to deter future noncompliance by Clark & Washington and Mr.
Burroughs with respect to all of their filings.66
Section 105 outlines certain powers of the court and imposes upon the court a duty to uphold
the provisions of the Bankruptcy Code in subsection (a) by authorizing the court to “issue any order,
process, or judgment that is necessary or appropriate to carry out the provisions of this title.” 11
U.S.C. § 105(a) (2005). The court may use its § 105(a) equitable powers “in furtherance of the goals
of the [Bankruptcy] Code,” Childress v. Middleton Arms, L.P. (In re Middleton Arms, L.P.), 934
F.2d 723, 725 (6 Cir. 1991), and included within the court’s § 105(a) powers is the authority to findth
a party in contempt. Pertuso v. Ford Motor Credit Co., 233 F.3d 417, 423 n.1 (6 Cir. 2000). Civilth
contempt is generally used by courts to coerce an individual into performing or obeying an order of
the court and to compensate the party injured by the contemptuous actions. United States v.
Bayshore Assocs., Inc., 934 F.2d 1391, 1400 (6 Cir. 1983); In re Walker, 257 B.R. 493, 497 (Bankr.th
N.D. Ohio 2001) (“Compensatory contempt orders compensate the party harmed by the other party’s
contemptuous actions; coercive orders seek to cajole the party in contempt to act in the manner
desired by the court.”) (quoting Consol. Rail Corp. v. Yashinsky, 170 F.3d 591, 595 (6 Cir. 1999)). th
The U.S. Trustee has requested, as additional sanctions, the following: the disallowance of fees in their66
entirety, termination of Clark & Washington and Zachary Burroughs’ status as Registered Users of the court’s electronic
case filing system, requiring all attorneys with Clark & Washington to attend continuing legal education courses
supplemental to those required by the State of Tennessee, and/or the suspension of Clark & Washington and its attorneys
to practice law in the United States Bankruptcy Court for the Eastern District of Tennessee.
114
“Contempt must be shown by clear and convincing evidence that the alleged contemnor violated a
definite and specific court order which required the performance or the nonperformance of an act
with knowing of that court order.” In re Ashley, 2007 Bankr. LEXIS 3639, at *2, 2007 WL 3125128,
at *1 (Bankr. N.D. Ohio Oct. 24, 2007) (citing Walker, 257 B.R. at 497). Nevertheless,
“[w]illfulness is not an essential element of civil contempt.” In re Crabtree, 39 B.R. 702, 710
(Bankr. E.D. Tenn. 1984).
Courts are “afforded wide discretion in fashioning an equitable remedy for civil contempt[,]”
McGregor v. Chierico, 206 F.3d 1378, 1385 n.5 (11 Cir. 2000), and the failure to comply with theth
disclosure requirements is a sanctionable violation, in itself grounds for disgorgement of fees.
Waldo, 417 B.R. at 893 (citing cases). As a result of their inaccurate disclosures in Waldo, Clark &
Washington was required to disgorge all fees received from the Debtors in those seven cases, making
the decision to voluntarily return $123,742.00 in numerous other cases. And yet, within days after
the Waldo opinion was entered, Clark & Washington once again began filing inaccurate Rule 2016
Compensation Disclosure Statements which were followed by inaccurate Amended Compensation
Disclosure Statements and subsequently by unverified and unauthorized Amended Statements of
Financial Affairs.67
In 2009, Clark & Washington’s Knoxville office filed approximately 1,900 Chapter 7 cases in this court’s67
Northern Division, and from January 1 through the date of this Memorandum, Mr. Burroughs and the Knoxville office
of Clark & Washington have filed approximately 1,000 Chapter 7 cases in the Northern Division.
115
III
Although the majority of these issues were addressed and, in the court’s mind, decided in
Waldo, in order to avoid any further litigation as to what is and what is not allowed concerning fee
arrangements in Chapter 7 cases and the disclosure of compensation requirements in all cases filed
in the Bankruptcy Court for the Eastern District of Tennessee, Northern Division, the court will
summarize, reiterating much of what it has held previously.
First, the Engagement Contracts entered into between Clark & Washington and each of the
fifteen Debtors creates a pre-petition obligation for payment of a lump sum or flat fee, and any
portion of that lump sum or flat fee not paid to the firm pre-petition has been discharged in fourteen
of these cases. The purported bifurcation of fees for pre- and post-petition services is a fiction, as
is the concept that the Debtors paid a retainer to be applied against services rendered based upon the
$165.00 “blended hourly rate.” It has been established that Clark & Washington does not maintain
time records for its clients and that it only created the estimated time records attached to Mr.
Burroughs’s Affidavit entered into evidence as Collective Trial Exhibit 97 after being directed to do
so by the court. Additionally, it has been established that the amount of fees charged greatly exceeds
the $165.00 “blended hourly rate.” Furthermore, as was evident from the testimony of the respective
Debtors, none of them understood that they were to be paying under a bifurcated contract, but
instead, each of them understood that the attorneys’ fee charged by Clark & Washington was a lump
sum they were required to pay for the entire bankruptcy, to be tendered prior to filing.
116
Second, in order to be a true“straddle” fee arrangement bifurcating pre- and post-petition
services, the contract must clearly identify the services to be included within the pre-petition fee and
the services to be included within the post-petition fee. It must also unambiguously disclose, at a
minimum, that all pre-petition fees must be paid prior to filing and any unpaid pre-petition fee will
be discharged and that all post-petition fees, which are not subject to the discharge, will be billed
only when services are rendered and only for the specific amount of time for each activity at an
agreed upon hourly rate for attorneys and a considerably lesser agreed upon hourly rate for para-
professionals. Attorneys may accept a pre-petition retainer to be billed against as long as the68
retainer is held in trust and drawn against as services are rendered, subject to time records being kept
and debtors being periodically sent an itemized statement of the work performed and the retainer
applied, without having to request the statement. Additionally, debtors must be made aware that they
will receive any unused portion of the retainer once their case is concluded, again, without having
to request it themselves.
Third, it is unacceptable for attorneys to ask for and receive post-dated checks from debtors,
irrespective of whether the checks are to be drawn on the debtors’ personal accounts or a third
party’s account, and the payment of attorneys’ fees through post-dated checks creates a conflict of
interest under Rule 1.8(a) of the Tennessee Rules of Professional Responsibility. Additionally, the
post-discharge deposit of any payments received from debtors or on their behalf for pre-petition fees
may be, to the extent it could be considered an action to collect on a discharged debt, violative of the
discharge injunction of 11 U.S.C. § 524(a).
Based upon the court’s independent review of compensation disclosure statements in other matters, the68
average approved hourly rate for para-professionals in this area is $75.00.
117
Fourth, Clark & Washington and its Knoxville attorneys must file Compensation Disclosure
Statements that accurately and fully reflect the fee arrangements with their clients. In the event the
fee contract includes post-petition services, the nature of the anticipated services, hourly billing rate,
and billing period should be disclosed. Additionally, each time an attorney receives post-petition
compensation of any kind from or on behalf of a debtor, a supplemental Rule 2016(b) Compensation
Disclosure Statement must be filed.
Fifth, before filing any documents signed electronically by debtors, attorneys must have, in
their possession, the original document containing the debtors’ handwritten signature.
IV
The court finds that Clark & Washington and Mr. Burroughs have either chosen to ignore
the Waldo decision or to utilize less than creative methods to circumvent the court’s ruling in Waldo,
not only in these fifteen cases but in other Chapter 7 cases filed in behalf of their debtor-clients since
October 27, 2009. Because the sanction of disgorgement has proved an insufficient deterrent, the
court will enhance the sanctions as follows:
1. Clark & Washington and Mr. Burroughs will, with the exception of the McGee case, No.
09-30353, be required to disgorge to the respective Debtors all attorney fees received pre- and post-
petition and to return to the Debtors all post-dated checks, whether the Debtor or a third-party was
the maker.
118
2. Clark & Washington and Mr. Burroughs will be required to disgorge $300.00 to Joseph
and April McGee in Case No. 10-30353 for their failure to file an accurate Compensation Disclosure
Statement.
3. Clark & Washington and Mr. Burroughs will be sanctioned the sum of $750.00 in all of
these cases, with the exception of McGee, which sum is to be paid to the Clerk of the court for
deposit to the United States Treasury.69
4. Clark & Washington and Mr. Burroughs shall be required to certify their compliance with
paragraphs 1, 2, and 3 herein within 30 days.
5. Clark & Washington and its attorneys representing debtors in Chapter 7 cases hereafter
filed in the court’s Northern Division, shall, commencing 10 days after the entry of the Orders
accompanying this Memorandum, be required to append the following declaration under penalty of
perjury as an attachment to the Compensation Disclosure Statement:
I certify under penalty of perjury that prior to the signing of the employment contractby myself and the debtor[s] I was personally present while the debtor[s] read thecontract; that I explained the agreed upon fee arrangement to the debtor[s]; that Iinquired of the debtor[s] whether there were questions regarding the contract and feearrangement, and answered those questions to the satisfaction of the debtor[s]; andthat the compensation disclosure statement filed in this case correctly and accuratelysets forth the fee agreement contained in the employment contract.
I also certify that the debtor[s], as required by Section III.A.3. of the AdministrativeProcedures for Electronic Case Filing, effective May 17, 2005, have actually signeda copy of all documents filed in this case containing an electronic signature.
The court wants to make it clear that this form of sanctions extends only to the cases presently before the69
court. Should the U.S. Trustee file disgorgement motions in other Chapter 7 cases filed by Clark & Washington and Mr.
Burroughs pending in the court’s Northern Division to the date of this memorandum, the court would not, in the absence
of egregious facts differing from those presently at issue, anticipate enhancing the sanctions beyond disgorgement.
119
The Compensation Disclosure Statement and Declaration shall both be dated and shall contain the
signing attorney’s handwritten signature.
6. Clark & Washington and Mr. Burroughs shall, pursuant to Rules 9014(c) and 7054(b) of
the Federal Rules of Bankruptcy Procedure, be directed to pay all costs associated with the
prosecution of these contested matters with the exception of Hart.
7. The obligations imposed on Clark & Washington and Mr. Burroughs in paragraph 5 above
will remain in place for six (6) months unless, on motion of the United States Trustee filed prior to
the expiration of the six (6) months, the court, for cause, extends this expiration date.
Orders consistent with this memorandum will be entered in each case.
FILED: August 31, 2010
BY THE COURT
/s/ RICHARD STAIR, JR.
RICHARD STAIR, JR.UNITED STATES BANKRUPTCY JUDGE
120
IN THE UNITED STATES BANKRUPTCY COURT FOR THEEASTERN DISTRICT OF TENNESSEE
In reCase No. 09-36177
JAMES SCOTT LAWSONKERRI McCON LAWSONaka KERRI ANN McCON
Debtors
O R D E R
Pursuant to the Memorandum on Debtor Attorney Fees and Disclosure Motions filed this
date, containing findings of fact and conclusions of law as required by Rule 52(a) of the Federal
Rules of Civil Procedure, made applicable to this contested matter by Rule 9014(c) of the Federal
Rules of Bankruptcy Procedure, the court directs the following:
1. The Amended Motion For Sanctions and Other Relief Against the Law Firm of Clark &
Washington, P.C. and Attorney Zachary Burroughs and Notice of Hearing filed by the United States
Trustee on March 19, 2010, is GRANTED.
SO ORDERED.
SIGNED this 31 day of August, 2010.THIS ORDER HAS BEEN ENTERED ON THE DOCKET.PLEASE SEE DOCKET FOR ENTRY DATE.
________________________________________Richard Stair Jr.
UNITED STATES BANKRUPTCY JUDGE
____________________________________________________________
2. The Motion for Sanctions Pursuant to 11 U.S.C. § 105(a) Against Clark & Washington,
P.C. and Zachary Burroughs For Violations of Local Rule 2090-2 and General Order 2008-05 filed
by the United States Trustee on April 1, 2010, is GRANTED.
3. Clark & Washington, P.C. and Zachary S. Burroughs shall disgorge and remit to the
Debtors, to the extent payment has been received, the $800.00 attorney fee charged under the terms
of the Chapter 7 Attorney - Client Agreement executed by the Debtors on November 3, 2009. To
the extent any portion of this fee remains unpaid and is represented by post-dated checks, such
checks shall be returned to the Debtors whether they or a third party was the maker.
4. Clark & Washington, P.C. and Zachary S. Burroughs are sanctioned $750.00 which sum
shall be paid to the clerk of the bankruptcy court for deposit to the United States Treasury.
5. Clark & Washington, P.C. and Zachary S. Burroughs shall certify their compliance with
paragraphs 3 and 4 above within thirty (30) days.
6. Clark & Washington, P.C., and its attorneys representing debtors in Chapter 7 cases
hereafter filed in the court’s Northern Division, shall, commencing ten (10) days after the entry of
this Order, append the following declaration under penalty of perjury as an attachment to the
Disclosure of Compensation statement:
I certify under penalty of perjury that prior to the signing of the employment contractby myself and the debtor[s] I was personally present while the debtor[s] read thecontract; that I explained the agreed upon fee arrangement to the debtor[s]; that Iinquired of the debtor[s] whether there were questions regarding the contract and feearrangement, and answered those questions to the satisfaction of the debtor[s]; andthat the compensation disclosure statement filed in this case correctly and accuratelysets forth the fee agreement contained in the employment contract.
I also certify that the debtor[s], as required by Section III.A.3. of the AdministrativeProcedures for Electronic Case Filing, effective May 17, 2005, have actually signeda copy of all documents filed in this case containing an electronic signature.
2
The Disclosure of Compensation statement and declaration shall be dated and shall contain the
signing attorney’s handwritten signature.
7. Clark & Washington, P.C. and Zachary S. Burroughs shall, pursuant to Rule 7054(b) of
the Federal Rules of Bankruptcy Procedure, made applicable to this contested matter by Rule 9014(c)
of the Federal Rules of Bankruptcy Procedure, pay all costs associated with the prosecution of this
contested matter.
8. The obligation imposed on Clark & Washington, P.C. and Zachary S. Burroughs in
paragraph 6 above will remain in place for six (6) months unless, on motion of the United States
Trustee filed prior to the expiration of the six (6) months, the court, for cause, extends this expiration
date.
###
3
IN THE UNITED STATES BANKRUPTCY COURT FOR THEEASTERN DISTRICT OF TENNESSEE
In reCase No. 09-36514
KENNETH JAMES HARTCARLA DEE HART
Debtors
O R D E R
Pursuant to the Memorandum on Debtor Attorney Fees and Disclosure Motions filed this
date, containing findings of fact and conclusions of law as required by Rule 52(a) of the Federal
Rules of Civil Procedure, made applicable to this contested matter by Rule 9014(c) of the Federal
Rules of Bankruptcy Procedure, and pursuant to the show cause Order entered on December 8, 2009,
the court directs the following:
1. Clark & Washington, P.C. and Zachary S. Burroughs shall disgorge and remit to the
Debtors, to the extent payment has been received, the $1,100.00 attorney fee charged under the terms
SO ORDERED.
SIGNED this 31 day of August, 2010.THIS ORDER HAS BEEN ENTERED ON THE DOCKET.PLEASE SEE DOCKET FOR ENTRY DATE.
________________________________________Richard Stair Jr.
UNITED STATES BANKRUPTCY JUDGE
____________________________________________________________
of the Chapter 7 Attorney - Client Agreement executed by the Debtors on November 20, 2009. To
the extent any portion of this fee remains unpaid and is represented by post-dated checks, such
checks shall be returned to the Debtors whether they or a third party was the maker.
2. Clark & Washington, P.C. and Zachary S. Burroughs are sanctioned $750.00 which sum
shall be paid to the clerk of the bankruptcy court for deposit to the United States Treasury.
3. Clark & Washington, P.C. and Zachary S. Burroughs shall certify their compliance with
paragraphs 1 and 2 above within thirty (30) days.
4. Clark & Washington, P.C., and its attorneys representing debtors in Chapter 7 cases
hereafter filed in the court’s Northern Division, shall, commencing ten (10) days after the entry of
this Order, append the following declaration under penalty of perjury as an attachment to the
Disclosure of Compensation statement filed in each case:
I certify under penalty of perjury that prior to the signing of the employment contractby myself and the debtor[s] I was personally present while the debtor[s] read thecontract; that I explained the agreed upon fee arrangement to the debtor[s]; that Iinquired of the debtor[s] whether there were questions regarding the contract and feearrangement, and answered those questions to the satisfaction of the debtor[s]; andthat the compensation disclosure statement filed in this case correctly and accuratelysets forth the fee agreement contained in the employment contract.
I also certify that the debtor[s], as required by Section III.A.3. of the AdministrativeProcedures for Electronic Case Filing, effective May 17, 2005, have actually signeda copy of all documents filed in this case containing an electronic signature.
The Disclosure of Compensation statement and declaration shall be dated and shall contain the
signing attorney’s handwritten signature.
5. The obligation imposed on Clark & Washington, P.C. and Zachary S. Burroughs in
paragraph 4 above will remain in place for six (6) months unless, on motion of the United States
2
Trustee filed prior to the expiration of the six (6) months, the court, for cause, extends this expiration
date.
###
3
IN THE UNITED STATES BANKRUPTCY COURT FOR THEEASTERN DISTRICT OF TENNESSEE
In reCase No. 09-36772
EVA LOUISE NEWMAN
Debtor
O R D E R
Pursuant to the Memorandum on Debtor Attorney Fees and Disclosure Motions filed this
date, containing findings of fact and conclusions of law as required by Rule 52(a) of the Federal
Rules of Civil Procedure, made applicable to this contested matter by Rule 9014(c) of the Federal
Rules of Bankruptcy Procedure, the court directs the following:
1. The Amended Motion For Sanctions and Other Relief Against the Law Firm of Clark &
Washington, P.C. and Attorney Zachary Burroughs and Notice of Hearing filed by the United States
Trustee on March 19, 2010, is GRANTED.
SO ORDERED.
SIGNED this 31 day of August, 2010.THIS ORDER HAS BEEN ENTERED ON THE DOCKET.PLEASE SEE DOCKET FOR ENTRY DATE.
________________________________________Richard Stair Jr.
UNITED STATES BANKRUPTCY JUDGE
____________________________________________________________
2. The Motion for Sanctions Pursuant to 11 U.S.C. § 105(a) Against Clark & Washington,
P.C. and Zachary Burroughs For Violations of Local Rule 2090-2 and General Order 2008-05 filed
by the United States Trustee on April 1, 2010, is GRANTED.
3. Clark & Washington, P.C. and Zachary S. Burroughs shall disgorge and remit to the
Debtor, to the extent payment has been received, the $1,250.00 attorney fee charged under the terms
of the Chapter 7 Attorney - Client Agreement executed by the Debtor on December 7, 2009. To the
extent any portion of this fee remains unpaid and is represented by post-dated checks, such checks
shall be returned to the Debtor whether she or a third party was the maker.
4. Clark & Washington, P.C. and Zachary S. Burroughs are sanctioned $750.00 which sum
shall be paid to the clerk of the bankruptcy court for deposit to the United States Treasury.
5. Clark & Washington, P.C. and Zachary S. Burroughs shall certify their compliance with
paragraphs 3 and 4 above within thirty (30) days.
6. Clark & Washington, P.C., and its attorneys representing debtors in Chapter 7 cases
hereafter filed in the court’s Northern Division, shall, commencing ten (10) days after the entry of
this Order, append the following declaration under penalty of perjury as an attachment to the
Disclosure of Compensation statement:
I certify under penalty of perjury that prior to the signing of the employment contractby myself and the debtor[s] I was personally present while the debtor[s] read thecontract; that I explained the agreed upon fee arrangement to the debtor[s]; that Iinquired of the debtor[s] whether there were questions regarding the contract and feearrangement, and answered those questions to the satisfaction of the debtor[s]; andthat the compensation disclosure statement filed in this case correctly and accuratelysets forth the fee agreement contained in the employment contract.
I also certify that the debtor[s], as required by Section III.A.3. of the AdministrativeProcedures for Electronic Case Filing, effective May 17, 2005, have actually signeda copy of all documents filed in this case containing an electronic signature.
2
The Disclosure of Compensation statement and declaration shall be dated and shall contain the
signing attorney’s handwritten signature.
7. Clark & Washington, P.C. and Zachary S. Burroughs shall, pursuant to Rule 7054(b) of
the Federal Rules of Bankruptcy Procedure, made applicable to this contested matter by Rule 9014(c)
of the Federal Rules of Bankruptcy Procedure, pay all costs associated with the prosecution of this
contested matter.
8. The obligation imposed on Clark & Washington, P.C. and Zachary S. Burroughs in
paragraph 6 above will remain in place for six (6) months unless, on motion of the United States
Trustee filed prior to the expiration of the six (6) months, the court, for cause, extends this expiration
date.
###
3
IN THE UNITED STATES BANKRUPTCY COURT FOR THEEASTERN DISTRICT OF TENNESSEE
In reCase No. 09-36796
MAURICE ROYSTON SOLESLILLIE LOUISE SOLES
Debtors
O R D E R
Pursuant to the Memorandum on Debtor Attorney Fees and Disclosure Motions filed this
date, containing findings of fact and conclusions of law as required by Rule 52(a) of the Federal
Rules of Civil Procedure, made applicable to this contested matter by Rule 9014(c) of the Federal
Rules of Bankruptcy Procedure, the court directs the following:
1. The Motion For Sanctions and Other Relief Against the Law Firm of Clark &
Washington and Attorney Zachary Burroughs and Notice of Hearing filed by the United States
Trustee on March 19, 2010, is GRANTED.
SO ORDERED.
SIGNED this 31 day of August, 2010.THIS ORDER HAS BEEN ENTERED ON THE DOCKET.PLEASE SEE DOCKET FOR ENTRY DATE.
________________________________________Richard Stair Jr.
UNITED STATES BANKRUPTCY JUDGE
____________________________________________________________
2. The Motion for Sanctions Pursuant to 11 U.S.C. § 105(a) Against Clark & Washington,
P.C. and Zachary Burroughs For Violations of Local Rule 2090-2 and General Order 2008-05 filed
by the United States Trustee on April 1, 2010, is GRANTED.
3. Clark & Washington, P.C. and Zachary S. Burroughs shall disgorge and remit to the
Debtors, to the extent payment has been received, the $800.00 attorney fee charged under the terms
of the Chapter 7 Attorney - Client Agreement executed by the Debtors on October 22, 2009. To the
extent any portion of this fee remains unpaid and is represented by post-dated checks, such checks
shall be returned to the Debtors whether they or a third party was the maker.
4. Clark & Washington, P.C. and Zachary S. Burroughs are sanctioned $750.00 which sum
shall be paid to the clerk of the bankruptcy court for deposit to the United States Treasury.
5. Clark & Washington, P.C. and Zachary S. Burroughs shall certify their compliance with
paragraphs 3 and 4 above within thirty (30) days.
6. Clark & Washington, P.C., and its attorneys representing debtors in Chapter 7 cases
hereafter filed in the court’s Northern Division, shall, commencing ten (10) days after the entry of
this Order, append the following declaration under penalty of perjury as an attachment to the
Disclosure of Compensation statement:
I certify under penalty of perjury that prior to the signing of the employment contractby myself and the debtor[s] I was personally present while the debtor[s] read thecontract; that I explained the agreed upon fee arrangement to the debtor[s]; that Iinquired of the debtor[s] whether there were questions regarding the contract and feearrangement, and answered those questions to the satisfaction of the debtor[s]; andthat the compensation disclosure statement filed in this case correctly and accuratelysets forth the fee agreement contained in the employment contract.
I also certify that the debtor[s], as required by Section III.A.3. of the AdministrativeProcedures for Electronic Case Filing, effective May 17, 2005, have actually signeda copy of all documents filed in this case containing an electronic signature.
2
The Disclosure of Compensation statement and declaration shall be dated and shall contain the
signing attorney’s handwritten signature.
7. Clark & Washington, P.C. and Zachary S. Burroughs shall, pursuant to Rule 7054(b) of
the Federal Rules of Bankruptcy Procedure, made applicable to this contested matter by Rule 9014(c)
of the Federal Rules of Bankruptcy Procedure, pay all costs associated with the prosecution of this
contested matter.
8. The obligation imposed on Clark & Washington, P.C. and Zachary S. Burroughs in
paragraph 6 above will remain in place for six (6) months unless, on motion of the United States
Trustee filed prior to the expiration of the six (6) months, the court, for cause, extends this expiration
date.
###
3
IN THE UNITED STATES BANKRUPTCY COURT FOR THEEASTERN DISTRICT OF TENNESSEE
In reCase No. 09-36802
CLEOFUS ANTHONY SANCHEZ, JR.BRANDY LEE SANCHEZ
Debtors
O R D E R
Pursuant to the Memorandum on Debtor Attorney Fees and Disclosure Motions filed this
date, containing findings of fact and conclusions of law as required by Rule 52(a) of the Federal
Rules of Civil Procedure, made applicable to this contested matter by Rule 9014(c) of the Federal
Rules of Bankruptcy Procedure, the court directs the following:
1. The Amended Motion For Sanctions and Other Relief Against the Law Firm of Clark &
Washington, P.C. and Attorney Zachary Burroughs and Notice of Hearing filed by the United States
Trustee on March 19, 2010, is GRANTED.
SO ORDERED.
SIGNED this 31 day of August, 2010.THIS ORDER HAS BEEN ENTERED ON THE DOCKET.PLEASE SEE DOCKET FOR ENTRY DATE.
________________________________________Richard Stair Jr.
UNITED STATES BANKRUPTCY JUDGE
____________________________________________________________
2. The Motion for Sanctions Pursuant to 11 U.S.C. § 105(a) Against Clark & Washington,
P.C. and Zachary Burroughs For Violations of Local Rule 2090-2 and General Order 2008-05 filed
by the United States Trustee on April 1, 2010, is GRANTED.
3. Clark & Washington, P.C. and Zachary S. Burroughs shall disgorge and remit to the
Debtors, to the extent payment has been received, the $1,250.00 attorney fee charged under the terms
of the Chapter 7 Attorney - Client Agreements executed by the Debtors on November 18, 2009, and
December 12, 2009. To the extent any portion of this fee remains unpaid and is represented by
post-dated checks, such checks shall be returned to the Debtors whether they or a third party was the
maker.
4. Clark & Washington, P.C. and Zachary S. Burroughs are sanctioned $750.00 which sum
shall be paid to the clerk of the bankruptcy court for deposit to the United States Treasury.
5. Clark & Washington, P.C. and Zachary S. Burroughs shall certify their compliance with
paragraphs 3 and 4 above within thirty (30) days.
6. Clark & Washington, P.C., and its attorneys representing debtors in Chapter 7 cases
hereafter filed in the court’s Northern Division, shall, commencing ten (10) days after the entry of
this Order, append the following declaration under penalty of perjury as an attachment to the
Disclosure of Compensation statement:
I certify under penalty of perjury that prior to the signing of the employment contractby myself and the debtor[s] I was personally present while the debtor[s] read thecontract; that I explained the agreed upon fee arrangement to the debtor[s]; that Iinquired of the debtor[s] whether there were questions regarding the contract and feearrangement, and answered those questions to the satisfaction of the debtor[s]; andthat the compensation disclosure statement filed in this case correctly and accuratelysets forth the fee agreement contained in the employment contract.
2
I also certify that the debtor[s], as required by Section III.A.3. of the AdministrativeProcedures for Electronic Case Filing, effective May 17, 2005, have actually signeda copy of all documents filed in this case containing an electronic signature.
The Disclosure of Compensation statement and declaration shall be dated and shall contain the
signing attorney’s handwritten signature.
7. Clark & Washington, P.C. and Zachary S. Burroughs shall, pursuant to Rule 7054(b) of
the Federal Rules of Bankruptcy Procedure, made applicable to this contested matter by Rule 9014(c)
of the Federal Rules of Bankruptcy Procedure, pay all costs associated with the prosecution of this
contested matter.
8. The obligation imposed on Clark & Washington, P.C. and Zachary S. Burroughs in
paragraph 6 above will remain in place for six (6) months unless, on motion of the United States
Trustee filed prior to the expiration of the six (6) months, the court, for cause, extends this expiration
date.
###
3
IN THE UNITED STATES BANKRUPTCY COURT FOR THEEASTERN DISTRICT OF TENNESSEE
In reCase No. 09-36875
WILLIAM BRADLEY DICKERSONCYNTHIA TAYLOR DICKERSON
Debtors
O R D E R
Pursuant to the Memorandum on Debtor Attorney Fees and Disclosure Motions filed this
date, containing findings of fact and conclusions of law as required by Rule 52(a) of the Federal
Rules of Civil Procedure, made applicable to this contested matter by Rule 9014(c) of the Federal
Rules of Bankruptcy Procedure, the court directs the following:
1. The Amended Motion For Sanctions and Other Relief Against the Law Firm of Clark &
Washington, P.C. and Attorney Zachary Burroughs and Notice of Hearing filed by the United States
Trustee on March 19, 2010, is GRANTED.
SO ORDERED.
SIGNED this 31 day of August, 2010.THIS ORDER HAS BEEN ENTERED ON THE DOCKET.PLEASE SEE DOCKET FOR ENTRY DATE.
________________________________________Richard Stair Jr.
UNITED STATES BANKRUPTCY JUDGE
____________________________________________________________
2. The Motion for Sanctions Pursuant to 11 U.S.C. § 105(a) Against Clark & Washington,
P.C. and Zachary Burroughs For Violations of Local Rule 2090-2 and General Order 2008-05 filed
by the United States Trustee on April 1, 2010, is GRANTED.
3. Clark & Washington, P.C. and Zachary S. Burroughs shall disgorge and remit to the
Debtors, to the extent payment has been received, the $1,250.00 attorney fee charged under the terms
of the Chapter 7 Attorney - Client Agreement executed by the Debtors on December 11, 2009. To
the extent any portion of this fee remains unpaid and is represented by post-dated checks, such
checks shall be returned to the Debtors whether they or a third party was the maker.
4. Clark & Washington, P.C. and Zachary S. Burroughs are sanctioned $750.00 which sum
shall be paid to the clerk of the bankruptcy court for deposit to the United States Treasury.
5. Clark & Washington, P.C. and Zachary S. Burroughs shall certify their compliance with
paragraphs 3 and 4 above within thirty (30) days.
6. Clark & Washington, P.C., and its attorneys representing debtors in Chapter 7 cases
hereafter filed in the court’s Northern Division, shall, commencing ten (10) days after the entry of
this Order, append the following declaration under penalty of perjury as an attachment to the
Disclosure of Compensation statement:
I certify under penalty of perjury that prior to the signing of the employment contractby myself and the debtor[s] I was personally present while the debtor[s] read thecontract; that I explained the agreed upon fee arrangement to the debtor[s]; that Iinquired of the debtor[s] whether there were questions regarding the contract and feearrangement, and answered those questions to the satisfaction of the debtor[s]; andthat the compensation disclosure statement filed in this case correctly and accuratelysets forth the fee agreement contained in the employment contract.
I also certify that the debtor[s], as required by Section III.A.3. of the AdministrativeProcedures for Electronic Case Filing, effective May 17, 2005, have actually signeda copy of all documents filed in this case containing an electronic signature.
2
The Disclosure of Compensation statement and declaration shall be dated and shall contain the
signing attorney’s handwritten signature.
7. Clark & Washington, P.C. and Zachary S. Burroughs shall, pursuant to Rule 7054(b) of
the Federal Rules of Bankruptcy Procedure, made applicable to this contested matter by Rule 9014(c)
of the Federal Rules of Bankruptcy Procedure, pay all costs associated with the prosecution of this
contested matter.
8. The obligation imposed on Clark & Washington, P.C. and Zachary S. Burroughs in
paragraph 6 above will remain in place for six (6) months unless, on motion of the United States
Trustee filed prior to the expiration of the six (6) months, the court, for cause, extends this expiration
date.
###
3
IN THE UNITED STATES BANKRUPTCY COURT FOR THEEASTERN DISTRICT OF TENNESSEE
In reCase No. 09-36938
MARY LOUISE ZICK
Debtor
O R D E R
Pursuant to the Memorandum on Debtor Attorney Fees and Disclosure Motions filed this
date, containing findings of fact and conclusions of law as required by Rule 52(a) of the Federal
Rules of Civil Procedure, made applicable to this contested matter by Rule 9014(c) of the Federal
Rules of Bankruptcy Procedure, the court directs the following:
1. The Amended Motion For Sanctions and Other Relief Against the Law Firm of Clark &
Washington, P.C. and Attorney Zachary Burroughs and Notice of Hearing filed by the United States
Trustee on March 19, 2010, is GRANTED.
SO ORDERED.
SIGNED this 31 day of August, 2010.THIS ORDER HAS BEEN ENTERED ON THE DOCKET.PLEASE SEE DOCKET FOR ENTRY DATE.
________________________________________Richard Stair Jr.
UNITED STATES BANKRUPTCY JUDGE
____________________________________________________________
2. The Motion for Sanctions Pursuant to 11 U.S.C. § 105(a) Against Clark & Washington,
P.C. and Zachary Burroughs For Violations of Local Rule 2090-2 and General Order 2008-05 filed
by the United States Trustee on April 1, 2010, is GRANTED.
3. Clark & Washington, P.C. and Zachary S. Burroughs shall disgorge and remit to the
Debtor, to the extent payment has been received, the $1,000.00 attorney fee charged under the terms
of the Chapter 7 Attorney - Client Agreement executed by the Debtor on December 8, 2009. To the
extent any portion of this fee remains unpaid and is represented by post-dated checks, such checks
shall be returned to the Debtor whether she or a third party was the maker.
4. Clark & Washington, P.C. and Zachary S. Burroughs are sanctioned $750.00 which sum
shall be paid to the clerk of the bankruptcy court for deposit to the United States Treasury.
5. Clark & Washington, P.C. and Zachary S. Burroughs shall certify their compliance with
paragraphs 3 and 4 above within thirty (30) days.
6. Clark & Washington, P.C., and its attorneys representing debtors in Chapter 7 cases
hereafter filed in the court’s Northern Division, shall, commencing ten (10) days after the entry of
this Order, append the following declaration under penalty of perjury as an attachment to the
Disclosure of Compensation statement:
I certify under penalty of perjury that prior to the signing of the employment contractby myself and the debtor[s] I was personally present while the debtor[s] read thecontract; that I explained the agreed upon fee arrangement to the debtor[s]; that Iinquired of the debtor[s] whether there were questions regarding the contract and feearrangement, and answered those questions to the satisfaction of the debtor[s]; andthat the compensation disclosure statement filed in this case correctly and accuratelysets forth the fee agreement contained in the employment contract.
I also certify that the debtor[s], as required by Section III.A.3. of the AdministrativeProcedures for Electronic Case Filing, effective May 17, 2005, have actually signeda copy of all documents filed in this case containing an electronic signature.
2
The Disclosure of Compensation statement and declaration shall be dated and shall contain the
signing attorney’s handwritten signature.
7. Clark & Washington, P.C. and Zachary S. Burroughs shall, pursuant to Rule 7054(b) of
the Federal Rules of Bankruptcy Procedure, made applicable to this contested matter by Rule 9014(c)
of the Federal Rules of Bankruptcy Procedure, pay all costs associated with the prosecution of this
contested matter.
8. The obligation imposed on Clark & Washington, P.C. and Zachary S. Burroughs in
paragraph 6 above will remain in place for six (6) months unless, on motion of the United States
Trustee filed prior to the expiration of the six (6) months, the court, for cause, extends this expiration
date.
###
3
IN THE UNITED STATES BANKRUPTCY COURT FOR THEEASTERN DISTRICT OF TENNESSEE
In reCase No. 10-30169
JOHN DOUGLAS COX
Debtor
O R D E R
Pursuant to the Memorandum on Debtor Attorney Fees and Disclosure Motions filed this
date, containing findings of fact and conclusions of law as required by Rule 52(a) of the Federal
Rules of Civil Procedure, made applicable to this contested matter by Rule 9014(c) of the Federal
Rules of Bankruptcy Procedure, the court directs the following:
1. The Motion For Sanctions and Other Relief Against the Law Firm of Clark &
Washington and Attorney Zachary Burroughs and Notice of Hearing filed by the United States
Trustee on March 19, 2010, is GRANTED.
SO ORDERED.
SIGNED this 31 day of August, 2010.THIS ORDER HAS BEEN ENTERED ON THE DOCKET.PLEASE SEE DOCKET FOR ENTRY DATE.
________________________________________Richard Stair Jr.
UNITED STATES BANKRUPTCY JUDGE
____________________________________________________________
2. The Motion for Sanctions Pursuant to 11 U.S.C. § 105(a) Against Clark & Washington,
P.C. and Zachary Burroughs For Violations of Local Rule 2090-2 and General Order 2008-05 filed
by the United States Trustee on April 1, 2010, is GRANTED.
3. Clark & Washington, P.C. and Zachary S. Burroughs shall disgorge and remit to the
Debtor, to the extent payment has been received, the $1,250.00 attorney fee charged under the terms
of the Chapter 7 Attorney - Client Agreement executed by the Debtor on December 9, 2009. To the
extent any portion of this fee remains unpaid and is represented by post-dated checks, such checks
shall be returned to the Debtor whether he or a third party was the maker.
4. Clark & Washington, P.C. and Zachary S. Burroughs are sanctioned $750.00 which sum
shall be paid to the clerk of the bankruptcy court for deposit to the United States Treasury.
5. Clark & Washington, P.C. and Zachary S. Burroughs shall certify their compliance with
paragraphs 3 and 4 above within thirty (30) days.
6. Clark & Washington, P.C., and its attorneys representing debtors in Chapter 7 cases
hereafter filed in the court’s Northern Division, shall, commencing ten (10) days after the entry of
this Order, append the following declaration under penalty of perjury as an attachment to the
Disclosure of Compensation statement:
I certify under penalty of perjury that prior to the signing of the employment contractby myself and the debtor[s] I was personally present while the debtor[s] read thecontract; that I explained the agreed upon fee arrangement to the debtor[s]; that Iinquired of the debtor[s] whether there were questions regarding the contract and feearrangement, and answered those questions to the satisfaction of the debtor[s]; andthat the compensation disclosure statement filed in this case correctly and accuratelysets forth the fee agreement contained in the employment contract.
I also certify that the debtor[s], as required by Section III.A.3. of the AdministrativeProcedures for Electronic Case Filing, effective May 17, 2005, have actually signeda copy of all documents filed in this case containing an electronic signature.
2
The Disclosure of Compensation statement and declaration shall be dated and shall contain the
signing attorney’s handwritten signature.
7. Clark & Washington, P.C. and Zachary S. Burroughs shall, pursuant to Rule 7054(b) of
the Federal Rules of Bankruptcy Procedure, made applicable to this contested matter by Rule 9014(c)
of the Federal Rules of Bankruptcy Procedure, pay all costs associated with the prosecution of this
contested matter.
8. The obligation imposed on Clark & Washington, P.C. and Zachary S. Burroughs in
paragraph 6 above will remain in place for six (6) months unless, on motion of the United States
Trustee filed prior to the expiration of the six (6) months, the court, for cause, extends this expiration
date.
###
3
IN THE UNITED STATES BANKRUPTCY COURT FOR THEEASTERN DISTRICT OF TENNESSEE
In reCase No. 10-30181
CHARLES ALLEN HOFFMAN
Debtor
O R D E R
Pursuant to the Memorandum on Debtor Attorney Fees and Disclosure Motions filed this
date, containing findings of fact and conclusions of law as required by Rule 52(a) of the Federal
Rules of Civil Procedure, made applicable to this contested matter by Rule 9014(c) of the Federal
Rules of Bankruptcy Procedure, the court directs the following:
1. The Motion For Sanctions and Other Relief Against the Law Firm of Clark &
Washington and Attorney Zachary Burroughs and Notice of Hearing filed by the United States
Trustee on March 19, 2010, is GRANTED.
SO ORDERED.
SIGNED this 31 day of August, 2010.THIS ORDER HAS BEEN ENTERED ON THE DOCKET.PLEASE SEE DOCKET FOR ENTRY DATE.
________________________________________Richard Stair Jr.
UNITED STATES BANKRUPTCY JUDGE
____________________________________________________________
2. The Motion for Sanctions Pursuant to 11 U.S.C. § 105(a) Against Clark & Washington,
P.C. and Zachary Burroughs For Violations of Local Rule 2090-2 and General Order 2008-05 filed
by the United States Trustee on April 1, 2010, is GRANTED.
3. Clark & Washington, P.C. and Zachary S. Burroughs shall disgorge and remit to the
Debtor, to the extent payment has been received, the $1,250.00 attorney fee charged under the terms
of the Chapter 7 Attorney - Client Agreement executed by the Debtor on December 9, 2009. To the
extent any portion of this fee remains unpaid and is represented by post-dated checks, such checks
shall be returned to the Debtor whether he or a third party was the maker.
4. Clark & Washington, P.C. and Zachary S. Burroughs are sanctioned $750.00 which sum
shall be paid to the clerk of the bankruptcy court for deposit to the United States Treasury.
5. Clark & Washington, P.C. and Zachary S. Burroughs shall certify their compliance with
paragraphs 3 and 4 above within thirty (30) days.
6. Clark & Washington, P.C., and its attorneys representing debtors in Chapter 7 cases
hereafter filed in the court’s Northern Division, shall, commencing ten (10) days after the entry of
this Order, append the following declaration under penalty of perjury as an attachment to the
Disclosure of Compensation statement:
I certify under penalty of perjury that prior to the signing of the employment contractby myself and the debtor[s] I was personally present while the debtor[s] read thecontract; that I explained the agreed upon fee arrangement to the debtor[s]; that Iinquired of the debtor[s] whether there were questions regarding the contract and feearrangement, and answered those questions to the satisfaction of the debtor[s]; andthat the compensation disclosure statement filed in this case correctly and accuratelysets forth the fee agreement contained in the employment contract.
I also certify that the debtor[s], as required by Section III.A.3. of the AdministrativeProcedures for Electronic Case Filing, effective May 17, 2005, have actually signeda copy of all documents filed in this case containing an electronic signature.
2
The Disclosure of Compensation statement and declaration shall be dated and shall contain the
signing attorney’s handwritten signature.
7. Clark & Washington, P.C. and Zachary S. Burroughs shall, pursuant to Rule 7054(b) of
the Federal Rules of Bankruptcy Procedure, made applicable to this contested matter by Rule 9014(c)
of the Federal Rules of Bankruptcy Procedure, pay all costs associated with the prosecution of this
contested matter.
8. The obligation imposed on Clark & Washington, P.C. and Zachary S. Burroughs in
paragraph 6 above will remain in place for six (6) months unless, on motion of the United States
Trustee filed prior to the expiration of the six (6) months, the court, for cause, extends this expiration
date.
###
3
IN THE UNITED STATES BANKRUPTCY COURT FOR THEEASTERN DISTRICT OF TENNESSEE
In reCase No. 10-30275
CARL DEAN LUTTRELL, JR.SHERRY RENEE LUTTRELL
Debtors
O R D E R
Pursuant to the Memorandum on Debtor Attorney Fees and Disclosure Motions filed this
date, containing findings of fact and conclusions of law as required by Rule 52(a) of the Federal
Rules of Civil Procedure, made applicable to this contested matter by Rule 9014(c) of the Federal
Rules of Bankruptcy Procedure, the court directs the following:
1. The Motion For Sanctions and Other Relief Against the Law Firm of Clark &
Washington, P.C. and Attorney Zachary Burroughs and Notice of Hearing filed by the United States
Trustee on March 19, 2010, is GRANTED.
SO ORDERED.
SIGNED this 31 day of August, 2010.THIS ORDER HAS BEEN ENTERED ON THE DOCKET.PLEASE SEE DOCKET FOR ENTRY DATE.
________________________________________Richard Stair Jr.
UNITED STATES BANKRUPTCY JUDGE
____________________________________________________________
2. The Motion for Sanctions Pursuant to 11 U.S.C. § 105(a) Against Clark & Washington,
P.C. and Zachary Burroughs For Violations of Local Rule 2090-2 and General Order 2008-05 filed
by the United States Trustee on April 1, 2010, is GRANTED.
3. Clark & Washington, P.C. and Zachary S. Burroughs shall disgorge and remit to the
Debtors, to the extent payment has been received, the $1,250.00 attorney fee charged under the terms
of the Chapter 7 Attorney - Client Agreement executed by the Debtors on December 5, 2009. To
the extent any portion of this fee remains unpaid and is represented by post-dated checks, such
checks shall be returned to the Debtors whether they or a third party was the maker.
4. Clark & Washington, P.C. and Zachary S. Burroughs are sanctioned $750.00 which sum
shall be paid to the clerk of the bankruptcy court for deposit to the United States Treasury.
5. Clark & Washington, P.C. and Zachary S. Burroughs shall certify their compliance with
paragraphs 3 and 4 above within thirty (30) days.
6. Clark & Washington, P.C., and its attorneys representing debtors in Chapter 7 cases
hereafter filed in the court’s Northern Division, shall, commencing ten (10) days after the entry of
this Order, append the following declaration under penalty of perjury as an attachment to the
Disclosure of Compensation statement:
I certify under penalty of perjury that prior to the signing of the employment contractby myself and the debtor[s] I was personally present while the debtor[s] read thecontract; that I explained the agreed upon fee arrangement to the debtor[s]; that Iinquired of the debtor[s] whether there were questions regarding the contract and feearrangement, and answered those questions to the satisfaction of the debtor[s]; andthat the compensation disclosure statement filed in this case correctly and accuratelysets forth the fee agreement contained in the employment contract.
I also certify that the debtor[s], as required by Section III.A.3. of the AdministrativeProcedures for Electronic Case Filing, effective May 17, 2005, have actually signeda copy of all documents filed in this case containing an electronic signature.
2
The Disclosure of Compensation statement and declaration shall be dated and shall contain the
signing attorney’s handwritten signature.
7. Clark & Washington, P.C. and Zachary S. Burroughs shall, pursuant to Rule 7054(b) of
the Federal Rules of Bankruptcy Procedure, made applicable to this contested matter by Rule 9014(c)
of the Federal Rules of Bankruptcy Procedure, pay all costs associated with the prosecution of this
contested matter.
8. The obligation imposed on Clark & Washington, P.C. and Zachary S. Burroughs in
paragraph 6 above will remain in place for six (6) months unless, on motion of the United States
Trustee filed prior to the expiration of the six (6) months, the court, for cause, extends this expiration
date.
###
3
IN THE UNITED STATES BANKRUPTCY COURT FOR THEEASTERN DISTRICT OF TENNESSEE
In reCase No. 10-30326
CYNTHIA LEA VITTETOEaka CYNTHIA LEA JETT
Debtor
O R D E R
Pursuant to the Memorandum on Debtor Attorney Fees and Disclosure Motions filed this
date, containing findings of fact and conclusions of law as required by Rule 52(a) of the Federal
Rules of Civil Procedure, made applicable to this contested matter by Rule 9014(c) of the Federal
Rules of Bankruptcy Procedure, the court directs the following:
1. The Motion For Sanctions and Other Relief Against the Law Firm of Clark &
Washington and Attorney Zachary Burroughs and Notice of Hearing filed by the United States
Trustee on March 19, 2010, is GRANTED.
SO ORDERED.
SIGNED this 31 day of August, 2010.THIS ORDER HAS BEEN ENTERED ON THE DOCKET.PLEASE SEE DOCKET FOR ENTRY DATE.
________________________________________Richard Stair Jr.
UNITED STATES BANKRUPTCY JUDGE
____________________________________________________________
2. The Motion for Sanctions Pursuant to 11 U.S.C. § 105(a) Against Clark & Washington,
P.C. and Zachary Burroughs For Violations of Local Rule 2090-2 and General Order 2008-05 filed
by the United States Trustee on April 1, 2010, is GRANTED.
3. Clark & Washington, P.C. and Zachary S. Burroughs shall disgorge and remit to the
Debtor, to the extent payment has been received, the $1,250.00 attorney fee charged under the terms
of the Chapter 7 Attorney - Client Agreement executed by the Debtor on January 19, 2010. To the
extent any portion of this fee remains unpaid and is represented by post-dated checks, such checks
shall be returned to the Debtor whether she or a third party was the maker.
4. Clark & Washington, P.C. and Zachary S. Burroughs are sanctioned $750.00 which sum
shall be paid to the clerk of the bankruptcy court for deposit to the United States Treasury.
5. Clark & Washington, P.C. and Zachary S. Burroughs shall certify their compliance with
paragraphs 3 and 4 above within thirty (30) days.
6. Clark & Washington, P.C., and its attorneys representing debtors in Chapter 7 cases
hereafter filed in the court’s Northern Division, shall, commencing ten (10) days after the entry of
this Order, append the following declaration under penalty of perjury as an attachment to the
Disclosure of Compensation statement:
I certify under penalty of perjury that prior to the signing of the employment contractby myself and the debtor[s] I was personally present while the debtor[s] read thecontract; that I explained the agreed upon fee arrangement to the debtor[s]; that Iinquired of the debtor[s] whether there were questions regarding the contract and feearrangement, and answered those questions to the satisfaction of the debtor[s]; andthat the compensation disclosure statement filed in this case correctly and accuratelysets forth the fee agreement contained in the employment contract.
I also certify that the debtor[s], as required by Section III.A.3. of the AdministrativeProcedures for Electronic Case Filing, effective May 17, 2005, have actually signeda copy of all documents filed in this case containing an electronic signature.
2
The Disclosure of Compensation statement and declaration shall be dated and shall contain the
signing attorney’s handwritten signature.
7. Clark & Washington, P.C. and Zachary S. Burroughs shall, pursuant to Rule 7054(b) of
the Federal Rules of Bankruptcy Procedure, made applicable to this contested matter by Rule 9014(c)
of the Federal Rules of Bankruptcy Procedure, pay all costs associated with the prosecution of this
contested matter.
8. The obligation imposed on Clark & Washington, P.C. and Zachary S. Burroughs in
paragraph 6 above will remain in place for six (6) months unless, on motion of the United States
Trustee filed prior to the expiration of the six (6) months, the court, for cause, extends this expiration
date.
###
3
IN THE UNITED STATES BANKRUPTCY COURT FOR THEEASTERN DISTRICT OF TENNESSEE
In reCase No. 10-30353
JOSEPH CHARLES McGEEAPRIL DAWN McGEE
Debtors
O R D E R
Pursuant to the Memorandum on Debtor Attorney Fees and Disclosure Motions filed this
date, containing findings of fact and conclusions of law as required by Rule 52(a) of the Federal
Rules of Civil Procedure, made applicable to this contested matter by Rule 9014(c) of the Federal
Rules of Bankruptcy Procedure, the court directs the following:
1. The Motion of United States Trustee to Compel the Attorneys For the Debtors to Amend
the Disclosure of Compensation and For Sanctions and Notice of Hearing filed by the United States
Trustee on March 1, 2010, is GRANTED.
SO ORDERED.
SIGNED this 31 day of August, 2010.THIS ORDER HAS BEEN ENTERED ON THE DOCKET.PLEASE SEE DOCKET FOR ENTRY DATE.
________________________________________Richard Stair Jr.
UNITED STATES BANKRUPTCY JUDGE
____________________________________________________________
2. Clark & Washington, P.C. and Zachary S. Burroughs shall disgorge and remit to the
Debtors $300.00 for their failure to provide accurate information in their Disclosure of
Compensation statement filed on January 28, 2010.
3. Clark & Washington, P.C. and Zachary S. Burroughs shall certify their compliance with
paragraph 2 above within thirty (30) days.
4. Clark & Washington, P.C. and Zachary S. Burroughs shall, pursuant to Rule 7054(b) of
the Federal Rules of Bankruptcy Procedure, made applicable to this contested matter by Rule 9014(c)
of the Federal Rules of Bankruptcy Procedure, pay all costs associated with the prosecution of this
contested matter.
###
2
IN THE UNITED STATES BANKRUPTCY COURT FOR THEEASTERN DISTRICT OF TENNESSEE
In reCase No. 10-30382
NATASHA OLIVIA WOMBLE
Debtor
O R D E R
Pursuant to the Memorandum on Debtor Attorney Fees and Disclosure Motions filed this
date, containing findings of fact and conclusions of law as required by Rule 52(a) of the Federal
Rules of Civil Procedure, made applicable to this contested matter by Rule 9014(c) of the Federal
Rules of Bankruptcy Procedure, the court directs the following:
1. The Motion For Sanctions and Other Relief Against the Law Firm of Clark &
Washington and Attorney Zachary Burroughs and Notice of Hearing filed by the United States
Trustee on March 19, 2010, is GRANTED.
SO ORDERED.
SIGNED this 31 day of August, 2010.THIS ORDER HAS BEEN ENTERED ON THE DOCKET.PLEASE SEE DOCKET FOR ENTRY DATE.
________________________________________Richard Stair Jr.
UNITED STATES BANKRUPTCY JUDGE
____________________________________________________________
2. The Motion for Sanctions Pursuant to 11 U.S.C. § 105(a) Against Clark & Washington,
P.C. and Zachary Burroughs For Violations of Local Rule 2090-2 and General Order 2008-05 filed
by the United States Trustee on April 1, 2010, is GRANTED.
3. Clark & Washington, P.C. and Zachary S. Burroughs shall disgorge and remit to the
Debtor, to the extent payment has been received, the $1,250.00 attorney fee charged under the terms
of the Chapter 7 Attorney - Client Agreement executed by the Debtor on December 17, 2009. To
the extent any portion of this fee remains unpaid and is represented by post-dated checks, such
checks shall be returned to the Debtor whether she or a third party was the maker.
4. Clark & Washington, P.C. and Zachary S. Burroughs are sanctioned $750.00 which sum
shall be paid to the clerk of the bankruptcy court for deposit to the United States Treasury.
5. Clark & Washington, P.C. and Zachary S. Burroughs shall certify their compliance with
paragraphs 3 and 4 above within thirty (30) days.
6. Clark & Washington, P.C., and its attorneys representing debtors in Chapter 7 cases
hereafter filed in the court’s Northern Division, shall, commencing ten (10) days after the entry of
this Order, append the following declaration under penalty of perjury as an attachment to the
Disclosure of Compensation statement:
I certify under penalty of perjury that prior to the signing of the employment contractby myself and the debtor[s] I was personally present while the debtor[s] read thecontract; that I explained the agreed upon fee arrangement to the debtor[s]; that Iinquired of the debtor[s] whether there were questions regarding the contract and feearrangement, and answered those questions to the satisfaction of the debtor[s]; andthat the compensation disclosure statement filed in this case correctly and accuratelysets forth the fee agreement contained in the employment contract.
I also certify that the debtor[s], as required by Section III.A.3. of the AdministrativeProcedures for Electronic Case Filing, effective May 17, 2005, have actually signeda copy of all documents filed in this case containing an electronic signature.
2
The Disclosure of Compensation statement and declaration shall be dated and shall contain the
signing attorney’s handwritten signature.
7. Clark & Washington, P.C. and Zachary S. Burroughs shall, pursuant to Rule 7054(b) of
the Federal Rules of Bankruptcy Procedure, made applicable to this contested matter by Rule 9014(c)
of the Federal Rules of Bankruptcy Procedure, pay all costs associated with the prosecution of this
contested matter.
8. The obligation imposed on Clark & Washington, P.C. and Zachary S. Burroughs in
paragraph 6 above will remain in place for six (6) months unless, on motion of the United States
Trustee filed prior to the expiration of the six (6) months, the court, for cause, extends this expiration
date.
###
3
IN THE UNITED STATES BANKRUPTCY COURT FOR THEEASTERN DISTRICT OF TENNESSEE
In reCase No. 10-30442
GARY STEVEN AARON, II
Debtor
O R D E R
Pursuant to the Memorandum on Debtor Attorney Fees and Disclosure Motions filed this
date, containing findings of fact and conclusions of law as required by Rule 52(a) of the Federal
Rules of Civil Procedure, made applicable to this contested matter by Rule 9014(c) of the Federal
Rules of Bankruptcy Procedure, the court directs the following:
1. The Motion For Sanctions and Other Relief Against the Law Firm of Clark &
Washington and Zachary Burroughs and Notice of Hearing filed by the United States Trustee on
March 19, 2010, is GRANTED.
SO ORDERED.
SIGNED this 31 day of August, 2010.THIS ORDER HAS BEEN ENTERED ON THE DOCKET.PLEASE SEE DOCKET FOR ENTRY DATE.
________________________________________Richard Stair Jr.
UNITED STATES BANKRUPTCY JUDGE
____________________________________________________________
2. Clark & Washington, P.C. and Zachary S. Burroughs shall disgorge and remit to the
Debtor, to the extent payment has been received, the $1,250.00 attorney fee charged under the terms
of the Chapter 7 Attorney - Client Agreement executed by the Debtor on January 23, 2010. To the
extent any portion of this fee remains unpaid and is represented by post-dated checks, such checks
shall be returned to the Debtor whether he or a third party was the maker.
3. Clark & Washington, P.C. and Zachary S. Burroughs are sanctioned $750.00 which sum
shall be paid to the clerk of the bankruptcy court for deposit to the United States Treasury.
4. Clark & Washington, P.C. and Zachary S. Burroughs shall certify their compliance with
paragraphs 2 and 3 above within thirty (30) days.
5. Clark & Washington, P.C., and its attorneys representing debtors in Chapter 7 cases
hereafter filed in the court’s Northern Division, shall, within ten (10) days after the entry of this
Order, append the following declaration under penalty of perjury as an attachment to the Disclosure
of Compensation Statement:
I certify under penalty of perjury that prior to the signing of the employment contractby myself and the debtor[s] I was personally present while the debtor[s] read thecontract; that I explained the agreed upon fee arrangement to the debtor[s]; that Iinquired of the debtor[s] whether there were questions regarding the contract and feearrangement, and answered those questions to the satisfaction of the debtor[s]; andthat the compensation disclosure statement filed in this case correctly and accuratelysets forth the fee agreement contained in the employment contract.
I also certify that the debtor[s], as required by Section III.A.3. of the AdministrativeProcedures for Electronic Case Filing, effective May 17, 2005, have actually signeda copy of all documents filed in this case containing an electronic signature.
The Disclosure of Compensation Statement and declaration shall be dated and shall contain the
signing attorney’s handwritten signature.
2
6. Clark & Washington and Mr. Burroughs shall, pursuant to Rule 7054(b) of the Federal
Rules of Bankruptcy Procedure, made applicable to this contested matter by Rule 9014(c) of the
Federal Rules of Bankruptcy Procedure, pay all costs associated with the prosecution of this
contested matter.
7. The obligation imposed on Clark & Washington, P.C. and Zachary S. Burroughs in
paragraph 5 above will remain in place for six (6) months unless, on motion of the United States
Trustee filed prior to the expiration of the six (6) months, the court, for cause, extends this expiration
date.
###
3
IN THE UNITED STATES BANKRUPTCY COURT FOR THEEASTERN DISTRICT OF TENNESSEE
In reCase No. 10-30444
KALENDA FAYE KNIGHT
Debtor
O R D E R
Pursuant to the Memorandum on Debtor Attorney Fees and Disclosure Motions filed this
date, containing findings of fact and conclusions of law as required by Rule 52(a) of the Federal
Rules of Civil Procedure, made applicable to this contested matter by Rule 9014(c) of the Federal
Rules of Bankruptcy Procedure, the court directs the following:
1. The Motion For Sanctions and Other Relief Against the Law Firm of Clark &
Washington and Zachary Burroughs and Notice of Hearing filed by the United States Trustee on
March 19, 2010, is GRANTED.
SO ORDERED.
SIGNED this 31 day of August, 2010.THIS ORDER HAS BEEN ENTERED ON THE DOCKET.PLEASE SEE DOCKET FOR ENTRY DATE.
________________________________________Richard Stair Jr.
UNITED STATES BANKRUPTCY JUDGE
____________________________________________________________
2. Clark & Washington, P.C. and Zachary S. Burroughs shall disgorge and remit to the
Debtor, to the extent payment has been received, the $1,250.00 attorney fee charged under the terms
of the Chapter 7 Attorney - Client Agreement executed by the Debtor on January 16, 2010. To the
extent any portion of this fee remains unpaid and is represented by post-dated checks, such checks
shall be returned to the Debtor whether he or a third party was the maker.
3. Clark & Washington, P.C. and Zachary S. Burroughs are sanctioned $750.00 which sum
shall be paid to the clerk of the bankruptcy court for deposit to the United States Treasury.
4. Clark & Washington, P.C. and Zachary S. Burroughs shall certify their compliance with
paragraphs 2 and 3 above within thirty (30) days.
5. Clark & Washington, P.C., and its attorneys representing debtors in Chapter 7 cases
hereafter filed in the court’s Northern Division, shall, within ten (10) days after the entry of this
Order, append the following declaration under penalty of perjury as an attachment to the Disclosure
of Compensation Statement:
I certify under penalty of perjury that prior to the signing of the employment contractby myself and the debtor[s] I was personally present while the debtor[s] read thecontract; that I explained the agreed upon fee arrangement to the debtor[s]; that Iinquired of the debtor[s] whether there were questions regarding the contract and feearrangement, and answered those questions to the satisfaction of the debtor[s]; andthat the compensation disclosure statement filed in this case correctly and accuratelysets forth the fee agreement contained in the employment contract.
I also certify that the debtor[s], as required by Section III.A.3. of the AdministrativeProcedures for Electronic Case Filing, effective May 17, 2005, have actually signeda copy of all documents filed in this case containing an electronic signature.
The Disclosure of Compensation Statement and declaration shall be dated and shall contain the
signing attorney’s handwritten signature.
2
6. Clark & Washington and Mr. Burroughs shall, pursuant to Rule 7054(b) of the Federal
Rules of Bankruptcy Procedure, made applicable to this contested matter by Rule 9014(c) of the
Federal Rules of Bankruptcy Procedure, pay all costs associated with the prosecution of this
contested matter.
7. The obligation imposed on Clark & Washington, P.C. and Zachary S. Burroughs in
paragraph 5 above will remain in place for six (6) months unless, on motion of the United States
Trustee filed prior to the expiration of the six (6) months, the court, for cause, extends this expiration
date.
###
3